Although I disagree with what Poloz is doing....I cannot disagree with anything that you have written.   I do believe that the relative strength of our economy justifies raising rates....but Poloz controls short rates, not ten year rates...and ten year rates have stayed stubbornly low....suggesting that your response "lower aggregated demand" is largely responsible for the unusually (?) low rates that exist further out the curve i.e. five and ten years).

I do think that Poloz is waaay too concerned about keeping the Loonie down, and that the economy (now eight years into a recovery) justifies higher s.t. rates.    Whether the long end will follow or not is a separate issue.