The former governor of the Bank of Canada says the full effects of all these interest rate hikes will be ”more powerful” than many think.

Speaking in Ottawa at a conference hosted by Western University’s Ivey Business School, Stephen Poloz warns the current economy is more sensitive to rates than the economy of 10 years ago.

”Does anybody here think the sensitivity of the economy to interest rate movements is less today that it was five or 10 years ago?,” he asked.

”I think (it) is more sensitive today than it was before.”

Poloz estimates annual inflation will fall to around 4% on its own as external factors, such as higher commodity prices, ease.

However, he adds policy action will have to do the remainder of the work for inflation to get back to the central bank’s 2% target.

”I think that the actions that are being taken to get us there will turn out to be even more powerful than a lot of people think,” according to Poloz.