The problem is that the totality of “monetary policy” is more than “interest rates”.
And while the Fed has obligations that the Canadian central bank authorities do not have - because the U.S. dollar is a (or “the”) “reserve” currency and the price-delimiter in so much foreign trade - the trade imbalance (trade deficit) is, in part, reflective of a monetary imbalance fueled by the printing of too many dollars (no matter what the reasons, excuses were).
The Canadian economy did not have all those extra dollars seeking their homeland to re-invest in.
They were “extra” dollars because Americans were borrowing and spending and consuming more than they were earning, in the aggregate, but the Fed just printed enough dollars to let them do it anyway.
When the foreigners piled up too many of them, selling the imports Americans bought on debt, they sent them (the dollars) back to the U.S. and, in part, bought securitized mortgage instruments (that had Uncle Sam standing behind them- implied) but got higher interest rates than treasury notes.
But yes, another shibboleth that needs to be torn down is the acceptance of the Fed’s easy-money printing presses and the failure to acknowledge the role of it’s policies in the trade deficit and excessive debt.
The Canadian central bankers cannot use the pretense of their currency being a “world reserve currency” to excuse political abuse of their monetary policy, as our Fed has done (probably for my entire lifetime). That’s a good thing for them, with regard to how monetary policy intersects with interest rates and housing; theirs is more stable.
Well stated. The dollar’s “reserve currency” status is a double-edged sword - it could be a blessing and a curse... but is something that often is not considered, particularly regarding the “inflation”.
It certainly makes the job of the Fed far more difficult, having to consider, gauge and attempt to balance the worldwide demand of officially and unofficially pegged sovereign currencies, in addition to accommodating domestic demand, organically or artificially (politically) created.