U.S. economist Carl Weinberg today slammed the Bank of Canada for hiking interest rates, in turn pushing up the Canadian dollar, which he linked to poor manufacturing numbers in the most recent report.

"Central bankers around the world, there is a lesson for you in this report: Beware the retraction of monetary accommodation - a.k.a. hiking interest rates, or otherwise tightening monetary conditions - when the largest economies of the world are not," the chief economist of High Frenquency Economics said in a research note.

"You could get your head handed to you, especially if you are a small, export-dependent nation."

Statistics Canada reported earlier this week that manufacturing sales slipped 0.6 per cent in September. New orders plunged, largely because of the transportation sector.

"We figure the dip in manufacturing production is linked to the dip in exports," Mr. Weinberg said.

"They were 10.5 per cent higher than a year ago in September, but they remain 25.3 per cent lower than their peak.

"The export debacle can be directly linked to a number of factors, including subpar growth in the United States, structural changes in the North American auto industry and the collapse of U.S. demand for home construction materials and energy in volume terms. It is also linked to the appreciation of the loonie, now flirting with par against the U.S. dollar."

Mr. Weinberg links the dollar's rise to the Bank of Canada's three increases in its benchmark overnight rate since the recession's end "in a battle against inflation that clearly does not exist."

"So the trade balance is now in deficit, exports are in the garbage can and manufacturing has been devastated."

Other economists have also linked the weakness in manufacturing and a swelling trade deficit to the loonie's rise but also to sputtering demand in the United States and the attractiveness of Canadian assets to foreign investors given the country's economic and fiscal standings.

At its last policy meeting in mid-October, the central bank held its key rate steady at 1 per cent, following three hikes. And it did note the softness in global economies and that fact that inflation was running slightly below its forecast. It also noted that any further tightening would have to be "carefully considered."

Its key rate is still at historically low levels and, the central bank noted when it last hiked rates in early September, "as a result of monetary policy measures taken since April, financial conditions in Canada have tightened modestly but remain exceptionally stimulative."