Listening to Mark Carney talk tough is like watching Stephane Dion pound his fists on the table. Well ok a little more credible than that. Being a former GS man you know he knows people who know people. Some of which I should think are quite unpleasant characters. Problem is there is not really a robust connection between the value of the Canadian dollar and inflation or deflation. Currency traders probably know this…at least more than they have some version of the standard (and empirically dubious) model in their head. So when Carney says “we take our inflation target seriously.” Currency traders likely shrug and say: “we are banking on it.”
Carney’s problem (well actually the manufacturing sector’s problem) is that the BOC does not care about the level of activity in exports. It only cares about their target. Full stop. So unless deflation increases in some way that can be definitively linked to the appreciation of the CAD–which is doubtful–the BOC is not going to do anything.