Cut Rates We're Choking, says CTA

The Canadian Trucking Association (CTA) is calling on the Bank of Canada to cut rates by at least 50 basis points by its next meeting Dec. 2 or risk choking off export growth. “There is a 175 basis point differential between Canada-U.S. short-term interest rates, which seems to be serving little purpose other than to prop up the Canadian dollar and constrain economic activity. Inflation is low, so

Nov. 6, 2003

The Canadian Trucking Association (CTA) is calling on the Bank of Canada to cut rates by at least 50 basis points by its next meeting Dec. 2 or risk choking off export growth.

“There is a 175 basis point differential between Canada-U.S. short-term interest rates, which seems to be serving little purpose other than to prop up the Canadian dollar and constrain economic activity. Inflation is low, so it does not seem to make much sense,” says David Bradley, CEO of the CTA.

The higher dollar has a couple of impacts on the trucking industry. The first comes from the fact that trucking companies’ expenses are mainly in Canadian dollars while they are paid in American dollars. When the Canadian dollar is higher, it cuts into the company’s profit margin. The second impact affects how expensive Canadian exports become as a result of a higher Canadian dollar. Since Canadian haulers carry Canadian exports, it translates into less international freight and dampens overall economic prospects in Canada, Bradley says.