Former Bank of Canada Governor Stephen Poloz said that the impact of raising interest rates will be greater than people expect.

In his speech at a conference in Ottawa hosted by the Ivey Business School at Western University, the former governor warned that today’s economy is more sensitive to interest rates than it was 10 years ago.

Poloz also estimated that the annual inflation rate will fall to about four percent on its own as external factors, such as rising commodity prices, subside.

He also added that policy measures will need to do the rest of the work to bring inflation back to the central bank’s target of 2 percent.

Likewise, Poloz defended the use of the word “transitory” to describe inflation pressures, noting that the international contributors to inflation have already begun to dissipate.

However, the former central bank governor said it takes time for this development to be reflected in the annual inflation rate.