But if domestic demand was already rising rapidly, and the Canadian economy was operating at high levels, the spillover of strong US demand would have the potential to strain our production capacity and lead to higher inflation in the future.
The important judgment that your central bank must make - every step of the way - is how these domestic and external forces add up. When the Canadian economy is generally in sync with that of the United States, and interest rates in our two countries are moving in the same direction, I can appreciate that Canadian monetary policy may be difficult to interpret.