Bank of Canada says interest rates may not be high enough

Bank of Canada Governor Tiff Macklem takes part in a news conference after announcing an interest rate decision in OttawaOTTAWA, Sept 7 - Bank of Canada Governor Tiff Macklem on Thursday said interest rates may not be high enough to bring inflation back down to target, sending a hawkish message after holding borrowing costs at a 22-year high a day earlier.

Canada's gross domestic product unexpectedly shrank an annualized 0.2% in the second quarter, a sign the economy could have already entered a recession as higher rates sink in. But inflation accelerated in July to 3.3% and core measures remained at about 3.5%. The tone of the speech clashed with the message coming from Canadian politicians in recent days. Before the Wednesday rate decision, three provincial premiers wrote to Macklem urging him to hold rates.

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