Several provinces are urging Bank of Canada governor David Dodge to take action against the impact the high Canadian dollar is having on the country's manufacturing sector.
The message comes amid a warning from the central bank's chief that interest rates may have to be raised next month to rein in inflation.
''My arguments to Mr. Dodge today will be that he should be very, very concerned about the impact on Canadian manufacturers as he goes about the business of setting Canada's monetary policy,'' Ontario Finance Minister Greg Sorbara said Wednesday in Meech Lake, Que.
Alberta and several other provinces backed Sorbara's argument.
''For every cent the dollar rises, it costs Alberta $123 million,'' in reduced revenues from oil and gas exports, said Alberta Finance Minister Lyle Oberg.
Sorbara also said the higher dollar, which has been trading near 94 cents US, is making Canada's exports less profitable on world markets after currency conversions.
He said Ontario has lost 140,000 manufacturing jobs in the last four years, and that his government and Ottawa had done their part to encourage manufacturing -- including ending lower taxes and write-offs for new equipment -- but the dollar's rise is crippling the sector.
''Governor Dodge needs to be concerned about the impact higher interest rates will have on the dollar and the impact of a higher dollar on Canadian manufacturers,'' he said.
Sorbara made the comments on his way to a day-long federal-provincial meeting of finance ministers, which the bank governor is attending.
Dodge warned last week that he may have to raise interest rates on July 10 to keep the Canadian economy from overheating and to keep inflation in check.
Meanwhile, the bank received positive news from a Statistics Canada report on Tuesday that said core inflation, which was 2.5 per cent in April, had cooled to 2.2 per cent in May.
The ministers are at the Meech Lake government retreat outside the capital to discuss the current state of the economy and issues dealing with the economic union.
Although not on the official agenda, Nova Scotia, Newfoundland and Saskatchewan are expected to seek support from their provincial counterparts in their fight with Finance Minister Jim Flaherty over equalization.
All three provinces accuse the federal government of breaking their promise to exclude non-renewable natural resource revenues from the new formula.
Flaherty said during the first round of talks on Monday that he didn't expect movement on the equalization dispute, noting provinces haven't been able to agree on the best approach.
With files from The Canadian Press
