Bank of Canada Governor Tiff Macklem confirmed on Friday that he has not changed his view on raising interest rates, even amid growing expectations of a possible recession next year. Macklem told reporters from Washington, where he was attending the annual meetings of the International Monetary Fund and the World Bank, that it is not the right time to be flexible on interest rates, reaffirming the central bank's current goal of restoring price stability and reducing inflation. Macklem also said the central bank will closely monitor how the US economy develops after yesterday's September inflation data showed core consumer price inflation, excluding food and energy, rising to the highest level in 40 years, increasing the chances of further significant interest rate hikes in the United States. Likewise, after reaching an annual rate of 8.1 percent in June, the pace of price increases in Canada slowed slightly, largely due to lower gas prices. Additionally, the annual inflation rate for August reached seven percent, but Canadians still feel the pain at grocery stores, where food prices rose by 10.8 percent in August compared to the same time last year — the fastest rate since 1981. In a Friday note, RBC said it expects the headline inflation rate for September to fall to 6.7 percent when it is released next week. However, bank economists said core consumer price inflation, excluding food and energy, might rise slightly. Also, Andrew Grantham, Chief Economist at CIBC Capital Markets, said in a note that he expects inflation in Canada to show greater signs of slowing compared to the United States, largely due to the way housing costs are calculated, writing: "However, the rebound in oil prices and expanding refining margins have caused gasoline prices to rise again in October, which will see headline inflation accelerate again for at least one month." The Bank of Canada will release its latest economic forecasts alongside the upcoming interest rate announcement on October 26. Claire Fan, an RBC economist, said in an interview she expects a half-percentage-point increase provided there are no "surprises" in next week's inflation data or business outlook surveys. The Bank of Canada also delivered a massive three-quarter point interest rate hike in September after raising it by a full percentage point in July. Earlier this week, the IMF released its forecast for the Canadian economy, stating that the financial agency now expects Canada to grow by 3.3 percent this year compared to 3.4 percent in the July forecast, while growth for 2023 is expected to come in at 1.5 percent, down from the previous forecast of 1.8 percent. The IMF expects interest rate hikes to continue in 2023, echoing the Bank of Canada. Similarly, the report noted that demand in the Canadian economy is excessive, despite worsening medium-term outlooks — also aligning with the Bank of Canada’s view. Last week, the Canadian economy recorded a modest employment stumble for September, indicating the labor market remains exceptionally tight, with the unemployment rate for the month dropping to 5.2 percent from 5.4 percent in August, and the economy added 21,000 jobs. Meanwhile, both the IMF and Canada Mortgage and Housing Corporation warn of a possible recession in the near future, joining a group of private sector economists. RBC economists also now expect a "mild recession" as early as the first quarter of next year, but they expect unemployment to be "less severe" than in previous downturns.