The Bank of Canada has more work to do in taming stubborn price pressures despite signs headline inflation may have peaked, Governor Tiff Macklem said.

Macklem delivered the hawkish message in a newspaper opinion piece Tuesday afternoon, hours after Statistics Canada reported that consumer price gains slowed to a 7.6 per cent yearly pace in July on a steep drop in gasoline prices. 

Details of the release showed underlying price pressures still building and rippling persistently throughout the economy, which increased market bets of another outsized interest-rate hike from Macklem and his officials next month.

“Tuesday’s inflation number offers a bit of relief, but unfortunately, it will take some time before inflation is back to normal,” the central banker said in the National Post. “We know our job is not done yet -- it won’t be done until inflation gets back to the 2 per cent target.”

Macklem’s comments and the sticky inflation reading firmed up conviction among traders in overnight swaps that the Bank of Canada will hike by as much as 75 basis points on Sept. 7 to rein in price pressures. The bank delivered a surprise full-percentage-point increase in July, which officials termed a “front-loading” of hikes.

Having held at an emergency pandemic low of 0.25 per cent, the policy interest rate is now at 2.5 per cent and economists expect it will reach at least 3.5 per cent by the end of this year

“By acting forcefully in raising interest rates now, we are trying to avoid the need for even higher interest rates and a sharper slowing down the road,” Macklem wrote on Tuesday.

The opinion piece is Macklem’s second since taking over as governor in June 2020. A year ago, he took to the pages of the Financial Post to defend a three-month run of excessive consumer price gains.