Bank of Canada Governor Tiff Macklem said uncertainty in financial markets won’t derail his plans to hike interest rates, arguing high inflation remains the “immediate” threat to the global economy.

Macklem, speaking to reporters Friday after the annual meetings of the International Monetary Fund and World Bank Group in Washington, said his talks there reinforced a commitment for central banks to “keep a steady hand and keep focused on price stability.” 

“There was a broad consensus that inflation remains the most immediate threat to current and future prosperity,” Macklem said, adding that “there was concern that the longer inflation remained high, the bigger was the risk that high inflation becomes entrenched.” 

The comments reinforce the Bank of Canada’s discomfort with elevated price pressures and its commitment to keep raising borrowing costs alongside its global peers, even amid financial volatility caused in part by the meltdown in U.K. markets.

“There has been a marked tightening in global financial conditions,” Macklem said. “By and large that has been reasonably orderly. That tightening is intended, it is needed to control inflation.”

Characterizing the mood at the meetings as one of both “concern” and “resolve,” Macklem noted elevated uncertainty stemming from unresolved supply chain issues, energy price volatility and recent liquidity problems. “There’s also concern about possible unintended consequences of the needed tightening in financial conditions,” Macklem said, citing turmoil in metals, energy and U.K. pension markets.

Still, he agreed with the IMF’s recent assessment of the risks to monetary policy. Earlier in the week, the fund said the consequences of spiraling inflation caused by under-tightening are a bigger worry than over-tightening borrowing costs.

The Bank of Canada is poised to push ahead with at least another 50 basis point interest-rate hike on Oct. 26. The benchmark rate currently stands at 3.25 per cent, three percentage points higher than the emergency pandemic low that held until March.

“In the current context, inflation is not just high. It’s a long way above 2 per cent target. Against that background, we’re more worried about upside risks to inflation than downside risks.”