Alberta Opposes Rate Hike

Relatively high inflation in Alberta seems to be the only justification for raising Canadian interest rates. In this context, it is tremendously significant that the Government of Alberta itself opposes increasing rates.

Of course, higher interest rates imply a higher Canadian dollar. Alberta sells oil and gas, the prices of which are denominated in US dollars. As the Canadian dollar rises, the provincial government receives fewer Canadian dollars for each barrel sold. As the provincial Finance Minister explained, “For every cent the dollar rises, it costs Alberta $123 million.” I suspect that the Government of Saskatchewan would take essentially the same position for essentially the same reason.

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