Former Bank of Canada governor David Dodge calls for higher interest rates

Former Bank of Canada governor David Dodge says the world economy might be better off if policy-makers bumped interest rates a little bit higher.

In prepared remarks for a speech today, Dodge says boosting borrowing costs would help promote price and financial stability under current global conditions, which include historically low interest rates and stagnant growth.

He says rate increases shouldn't hurt employment and growth if combined with more government spending.

He acknowledges, however, that extra spending would be a "big if" with many leaders reluctant to expand public investments.

The speech to members of the C.D. Howe Institute think-tank in Toronto comes less than a week before a scheduled rate announcement by Bank of Canada governor Stephen Poloz.

The Bank of Canada's trend-setting rate sits at a paltry 0.5 per cent. Experts widely expect Poloz to leave the rate untouched, for now.

However, the U.S. Federal Reserve is expected to begin raising its benchmark rate in December, a move that will power the U.S. dollar higher, but also put pressure on other countries to follow its lead.

Dodge was governor of the Bank of Canada from 2001 to 2008.