By Julie Gordon

OTTAWA, (Reuters) – While Canada’s inflation is more severe than anticipated, there are still “good reasons” to think they are temporary, Bank of Canada Governor Tiff Maklem stated on Thursday.

Macklem answered questions following a speech at a think tank on foreign policy. He said that Canada’s central banks expects inflation to stay above the 1-3% limit in 2021 mainly due to supply-chain disruptions and base-year effects.

“There is a little more persistence than what we thought. However, if you take a look, there are many reasons to believe they are temporary.” He said when he spoke about inflation’s driving factors.

Canada’s August inflation rate rose to 4.1%, an 18-year high. This has triggered public protests over the rising cost of living and worries about whether these increases will continue.

Macklem explained to reporters that the central bank’s job is to ensure that a one-off price increase doesn’t turn into ongoing inflation. What Macklem really wants to see is any indications of spreading.

According to him, while the short-term indicators of anticipated inflation were rising, they had stagnated in medium- and long-term.

Macklem stated that central banks were closely watching the growth of wages. He said that the central bank isn’t seeing any evidence that wages are an independent source for inflation.

“I would like to assure Canadians, that I will manage inflation,” he stated.

As companies require time to hire the best workers and workers need to find the most suitable jobs, it is taking more than anticipated to get through the “frictions” of the labor market.

“We haven’t reopened an entire economy before. He said that reopening an economic is more difficult than closing it.

According to economists, the comments were in line with the guidance from the Bank of Canada that rates will be held until 2022’s second half.

Macklem said Canada should have a framework for monetary policy that is “robust to all circumstances.”

Inflation-targeting guidelines have been in place since 1991. The bank is currently reviewing them. This year, the current Ottawa agreement expires.

Last year, the U.S. Federal Reserve adopted a looser form of average inflation.