In a speech today in New York, Paul Jenkins senior deputy governor of the Bank of Canada said that the risks to the Canadian economy posed by a stronger dollar are higher than previously thought.

But at the same time, the risks that the Canadian economy could overheat because of excessive demand are also higher than thought just a month ago.

“We judge that the risks to the Bank’s inflation projection are roughly balanced, with perhaps a slight tilt to the downside. And we also said that we judge, at this time, that the current level of the target for the overnight rate is consistent with achieving the inflation target over the medium term,” Jenkins said.

That suggests the bank will leave is key interest rate unchanged at its next meeting.

Jenkins pointed out that Canada’s economy is “operating further above its production potential”, despite the sharp appreciation of the Canadian dollar and “weakening prospects for the U.S. economy.”

Jenkins stressed that Canada’s economy is responding in a much different way to globalization than the U.S. economy, mainly because Canada benefits from strong commodity prices, which is not so in the United States.

He repeated earlier bank analysis that the recent sharp appreciation of the loonie “appears to be stronger than historical experience would have suggested.”

“Given recent information, both the upside and downside risks appear to be greater than they were” than just over two weeks ago when the bank completed its semi-annual Monetary Policy Report, Jenkins said.

The central bank’s next date to change interest rates is December 4.