The Canadian dollar is rapidly approaching parity with the U.S.

The Canadian economy expanded at its fastest pace since 2000 last quarter, its government reported yesterday. As measured by the funny little statistic known as GDP, the economy expanded at an annualized rate of 5%, beating the Bank of Canada’s projections by nearly two full percentage points.

Unlike in the U.S., growth in the great white north was relatively broad. And now with several quarters of expansion under their belt, there’s extra pressure on the Bank of Canada to start (gasp!) raising rates. Can you imagine? Banks willing to pay interest on savings again? What a world.

"The persistent strength of the Canadian dollar and the low absolute level of U.S. demand continue to act as significant drags on economic activity.”

The BoC said its lending rates would remain the same. “The target overnight rate [0.25%] can be expected to remain at its current level until the end of the second quarter of 2010,” the statement reads.