A former Group of Seven central banker says the time has come for the Federal Reserve to lead a coordinated global rate increase.

David Dodge, who ran the Bank of Canada between 2001 and 2008, will give a speech in Toronto Friday arguing the best medicine for the world’s economy would be higher interest rates, combined with new government stimulus through spending or tax cuts.

Low interest rates “may actually be retarding growth” as companies feel no hurry to borrow and invest, bank lending becomes less profitable and consumers need to set aside more money for retirement, Dodge said, according to the text of the speech to the Toronto-based C.D. Howe Institute.

The consensus in place since the 1980s around balanced budgets and central bank stimulus is no longer working, he said. Interest-rate cuts and asset purchases by central banks from Washington to Frankfurt have pushed yields on trillions of dollars of bonds below zero, but have failed to restore growth to levels seen before the global financial crisis. Budget tightening in many countries is adding to the drag in growth.

Practically, the U.S. Federal Reserve could take the lead by announcing a fixed timetable for raising its benchmark rate to 2 percent, he said.

“Such a policy would facilitate the better functioning of financial markets and reduce uncertainty,” Dodge said. “If other central banks committed to follow the Federal Reserve’s lead and fiscal authorities pursued expansionary policy, the current monetary policy straitjacket could be ended.”

The difficult task of boosting growth also requires more coordination between central banks and governments, Dodge said. In some cases that could take the form of an agreement to provide “helicopter money” to finance projects that boost productivity.

Dodge served as a top civil servant before leading the Bank of Canada, including during the era where the government slashed record budget deficits. As governor he set a 4.5 percent policy interest rate in 2007, a far cry from the current benchmark of 0.5 percent set now by Stephen Poloz.