Bank of Canada Governor Tiff Macklem said that the country needs to raise interest rates further and take more measures to combat inflation.
Macklem said there is little evidence that underlying or core inflation in Canada is decelerating and that inflation pressures in Canada have not yet eased.  

He said the Canadian labor market remains "very tight," with job openings at high levels and wage growth already climbing and continuing to expand.  Headline inflation has fallen to 7.0 percent in August from a peak of 8.1 percent in June, but measures of underlying or core inflation remain elevated at around 5 percent and have not fallen significantly.  

All indications are that the economy is in excess of demand and further rate hikes are warranted. The Bank of Canada will make its next interest rate announcement on October 26.  

Since March, the central bank has raised its key interest rate to 3.25 percent from 0.25 percent, in one of the fastest rate hike cycles in history. Money markets are pricing in a 60 percent chance the Bank of Canada will raise rates by 50 basis points in October.