By Julie Gordon and Ismail Shakil

OTTAWA (Reuters) – Inflation is too high in Canada, so the Bank of Canada needs to increase interest rates to slow spending and give the economy time to catch up, Governor Tiff Macklem said on Monday in a video posted by the central bank on Twitter.

“Inflation is too high,” Macklem said in a video tagged #AskTheBoC, echoing remarks made earlier this month after the central bank hiked its policy rate by 75-basis points to 3.25%.

“It is important that we get inflation back down so Canadians can plan their spending and their savings, and they don’t get surprised by big changes in their cost of living.”

The Bank of Canada, like many of its global peers, is rapidly increasing interest rates in response to inflation running at levels not seen in decades.

But the bank has faced public criticism for increasing borrowing costs at a time when many Canadians are already struggling to afford groceries and other essentials.

“It is by raising interest rates that we’re going to slow spending in the economy, give the economy time to catch up and take the steam out of inflation,” Macklem said in the video. “That’s gonna get inflation back down.”

The central bank has lifted rates by 300 basis points in just six months as it looks to wrangle inflation back to the 2% target. Canada’s inflation rate edged down to 7.0% in August from 8.1% in June and 7.6% in July.

The Canadian dollar weakened to its lowest level since May 2020 at 1.3808 to the greenback, or 72.42 U.S. cents, before clawing back some of its decline, along with broad-based volatility in currency markets.

(Reporting by Julie Gordon and Ismail Shakil in Ottawa, additional reporting by Fergal Smith in Toronto; Editing by Chizu Nomiyama and Andrea Ricci)