The head of the Bank of Canada told global policymakers that getting inflation back within its control range isn’t enough, reinforcing that interest rates may stay higher for longer.

Speaking at the International Monetary Fund in Washington a day after holding rates steady for a second-straight meeting, Governor Tiff Macklem stressed the primacy of the central bank’s 2 per cent target. He said bringing annual consumer price gains into the top of the 1 per cent to 3 per cent control range, which is forecast to happen in coming months, will be a relief but not a victory.

“That band, it’s not a zone of indifference. You need to aim for the middle of the band if you want to be in the band most of the time,” Macklem told the IMF’s acting director for the Western hemisphere on Thursday. “We need to get inflation re-centered on 2 per cent, so the normal variation of inflation is between 1 per cent and 3 per cent.”

On Wednesday, Macklem and his governing council upgraded their outlook and said recent data are “reinforcing” their confidence that inflation pressures will abate, while keeping the door open to additional hikes should the economy surprise to the upside. After raising the benchmark overnight rate to 4.5 per cent in January — a 15-year-high — the central banker became the first among his peers to signal a pause.

Swaps traders are now betting the Bank of Canada’s next move will be a cut later this year, as a burst of financial stability concerns stemming from the failure of a handful of U.S. regional lenders and the emergency sale of Credit Suisse to UBS ripples through markets and stokes global recession fears. The governor pushed back on those expectations in a press conference after the decision to stand pat, saying he and his officials discussed the possibility that rates need “to remain restrictive for longer to get inflation all the way back to target.”

Asked about global banking stresses on Thursday, he echoed that sentiment. “The financial system, like the rest of the economy, has to adjust to higher rates,” Macklem said.