Canada says the current commodities boom could last decades and warned developing countries against being too timid with interest rate hikes, while the International Monetary Fund said that much of the Latin American economy is overheating.

Bank of Canada Governor Mark Carney told policymakers from North and South America on Saturday that they should not count on commodities prices coming down any time soon, a position likely to be much discussed at this weekend's meeting of Western Hemisphere finance officials in snowy Calgary.

It's a mistake to chalk this all up to cyclical (factors), Carney said, referring to the argument that prices for goods such as copper and grains have risen only because of an upswing in the global business cycle.

We're in an environment that is probably going to be with us for several decades, he said during a panel discussion at the Inter-American Development Bank's annual meeting.

Across Latin America, inflation is accelerating on both strong consumer demand and because a soaring commodities market has pushed food prices higher.

Indeed, the head of the International Monetary Fund warned that many Latin American economies, which have rebounded from the global financial crisis with help from strong demand for their commodities exports, are now growing too quickly.

In many of them there are worrisome signs of overheating, IMF Managing Director Dominique Strauss-Kahn said in a blog, adding that growth in the region's financial markets put Latin America at greater risk of credit bubbles.

Strauss-Kahn said he discussed the region's policy challenges earlier in the day in Calgary with Western Hemisphere finance ministers, who held meetings in parallel with the IDB meeting.

Some Latin American policymakers have argued that the food-price boom will pass and that focus should be put on whether the temporary price shock will poison inflation expectations.

But Carney said in a speech on Saturday that the outlook for underlying demand is strong because of the rapid development of emerging markets.

He warned that misguided policies in emerging markets for dealing with high inflation and a flood of capital could lead to financial instability and weak global economic growth.

That's where one can make pretty big mistakes and delay too much, both on the monetary side, or on the pretty fundamental structural reforms, he said.

As the world recovers from recession, nations have clashed over foreign exchange policy as many countries adjust to ultra-low U.S. interest rates and China's reluctance to let the yuan appreciate more freely. Investors seeking high yields have put their money into Latin America, exacerbating these tensions.

Referring to what Brazil's finance minister dubbed the currency wars, Carney said that when large economies keep their currencies from appreciating, others feel pressured to follow suit. This leads to a chain reaction of other distortional policies.

The collective impact of this behavior risks inflation and asset bubbles in emerging economies and, over time, subpar global growth, he said.

THIS BOOM IS DIFFERENT

Carney sees the current high commodity prices persisting for much longer than in past boom cycles because of the rapid urbanization and mushrooming middle classes in emerging economies such as China and India.

Even though history teaches that all booms are finite, this one could go on for some time, he said.

The other thing that is different about this commodity boom -- and which could lead to dangerous global imbalances -- is that the strong demand from emerging markets is combined with tepid growth in core advanced economies such as the United States.

This shift to a multipolar economy is permanent and should not be underestimated, Carney said.

Some countries are postponing monetary tightening in the hope that old relationships reassert. Others have introduced measures to curb capital inflows. All appear to be underestimating the scale of what is happening. Therein lies the risk of another crisis, he said.

(Additional reporting by Jeffrey Jones; editing by Peter Galloway)

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