Business

OTTAWA -

Bank of Canada governor Tiff Macklem says more interest rate hikes are necessary to bring inflation down, despite some early signs of a slowing economy.

Speaking to the Halifax Chamber of Commerce on Thursday, Macklem said high inflation increasingly reflects domestic pressures on prices.

The governor said while global events such as the pandemic and the Russian invasion of Ukraine have fed into higher prices, demand is outpacing supply more broadly in the Canadian economy.

Macklem said, in hindsight, the bank's early assessment that high inflation was temporary was overly optimistic.

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As the economy fully reopened in the spring, pent-up demand for services in sectors like travel and recreation began driving inflation even higher, he said.

Canadians experienced these pressures first-hand when trying to book a campsite or reserve a table at their favourite restaurant, Macklem said, according to a prepared text of his speech released in Ottawa.