OTTAWA The Bank of Canada's monetary policy is working to cool the economy and relieve price pressures, but the central bank is prepared to raise interest rates further if inflation persists, Governor Tiff Macklem reiterated in remarks to lawmakers on Monday.

"We held our policy rate steady (last week) because monetary policy is working to cool the economy and relieve price pressures, and we want to give it time to do its job," Macklem told the finance committee in the House of Commons.

"We will continue to assess whether monetary policy is sufficiently restrictive to restore price stability, and we will monitor risks closely," he said.

The bank left its key overnight rate at a 22-year high of 5.0% on Wednesday but left the door open to more hikes, saying price risks were on the rise and inflation could exceed its target for another two years.

The Canadian economy has slowed, and last week's decision reflected efforts to "balance the risks of over- and under-tightening," Macklem told lawmakers.

The bank increased rates 10 times between March 2022 and this July to tame inflation, which peaked at a four-decade high of 8.1% last year. It has since come down, hitting 3.8% in September, but it remains way above the BoC's 2% target.

"We have made a lot of progress reducing inflation, but we are not there yet, and we need to stay the course," Macklem said.

(Reporting by Ismail Shakil and Steve Scherer in Ottawa; editing by Jonathan Oatis)