Among the many things complicating Mark Carney's life are a fat current account deficit and a strong dollar that could stay his hand on interest rates.

Mr. Carney and his rate-setting panel at the Bank of Canada flagged both those issues yesterday when they held their benchmark rate at 1 per cent. They also cited poor productivity gains among Canadian businesses, Europe's debt troubles, and the tentative nature of the global recovery.

They did upgrade their outlook for Canadian growth, and said the global rebound was picking up speed. But one of the things that caught the eye of economists was the fact that the central bank mentioned, for the first time in recent memory, the current account deficit, which swelled in the third quarter of last year to $17.5-billion.

That was the eighth quarterly deficit since late 2008.

"Net exports are projected to contribute more to growth going forward, supported by stronger U.S. activity and global demand for commodities," the Bank of Canada said as it announced no change in the overnight rate.

"However, the cumulative effects of the persistent strength in the Canadian dollar and Canada’s poor relative productivity performance are restraining this recovery in net exports and contributing to a widening of Canada’s current account deficit to a 20-year high."

The current account is the broadest measure of trade. As Globe and Mail economics reporter Jeremy Torobin wrote yesterday, a deficit in the flow of trade and foreign investment can provide an early warning of a country taking on too much debt, while a surplus can show it doing little to stimulate domestic demand.

The Canadian dollar while slipping yesterday on the Bank of Canada's comments, has been hovering over parity with its U.S. counterpart, and economists suggest further gains in the currency could prompt the central bank to hold off on raising interest rates. While rates are expected to remain unchanged for some time yet, the timing of the next rate hike has been a source of speculation.

"If you were looking for a sign from the Bank of Canada that it was uncomfortable with the Canadian dollar's recent trip through parity, look no further than Tuesday's policy statement," said BMO Nesbitt Burns economist Benjamin Reitzes.

"The bank specifically mentioned the current account deficit for the first time in recent memory, highlighting its 20-year extreme. The 'persistent strength in the Canadian dollar' and poor productivity performance ... were stated as the key reasons for the deterioration. The bank's apparent unease with the continued C$ strength suggest that a further appreciation could delay the next round of rate hikes beyond current expectations."

As for productivity, the Bank of Canada has "put it on its list" of threats to the economy, added Sal Guatieri, Mr. Reitzes' colleague at BMO.

Lagging productivity has been an issue that has dogged Canada for some time.

Over the past year, Canadian factories have actually outperformed those in the United States by driving labour costs down at a faster pace, Mr. Guatieri said, but he compared that to "the woeful underperformance" of the previous nine years.

"Any backsliding in productivity could worsen Canada's competitiveness, widen its current account deficit, detract from growth - and temper the monetary tightening cycle," he said.

Senior economist Pascal Gauthier of Toronto-Dominion Bank added that Mr. Carney and his colleagues appear "to have gone to lengths not to sound hawkish" in an attempt to spark another surge in the dollar.