During the years of high inflation - the 1970s and 1980s - a depreciation of the exchange rate would, all too often, raise fears of still higher inflation, which would then lead to further depreciation and higher interest rates.
Needless to say, it is only when expectations of inflation and of the future value of the Canadian dollar are well anchored that an independent monetary policy is possible. For only then will movements in the exchange rate permit adjustments in real (after-inflation) interest rates in Canada that are different from those in the United States.