A new study by the Canadian Centre for Policy Alternatives (CCPA) said that the Bank of Canada's strategy of rapidly increasing the key interest rate in an attempt to address high inflation is likely to lead to a recession.

The research institute says that if the central bank aims to reduce inflation from 7.7 percent to its 2 percent target by raising interest rates quickly, it may cause significant "side damages," including the loss of 850,000 jobs.

It adds that the central bank has had a zero percent success rate with this approach, pointing out that a 5.7 percent decrease in the inflation rate occurred three times over the past sixty years, each time following significant interest rate hikes accompanied by a recession.

The CCPA says it is time for a new policy on inflation.

It says that the Bank of Canada could reduce the risks of pushing the economy into recession if it adjusted the inflation target rate to four percent.

This study comes a day after the Bank of Canada released two quarterly surveys revealing that consumers and businesses expect inflation to remain high for several years.