It is also how the gift of a positive terms-of-trade shock gets spread even further. A stronger dollar gives the whole country greater purchasing power on global markets by bringing down the Canadian-dollar prices of imported goods and services. That means cheaper televisions, cheaper trips, cheaper tools. That’s good for Canadian consumers and for companies that buy machinery and equipment.
I will also explain why I believe that the Fed still has powerful tools at its disposal to fight the financial crisis and the economic downturn, even though the overnight federal funds rate cannot be reduced meaningfully further. The Federal Reserve's response to the crisis The Federal Reserve has responded aggressively to the crisis since its emergence in the summer of 2007.