Front-loading interest rate hikes is a key strategy for the Bank of Canada as it battles the fastest rising prices in nearly four decades, a senior official said on Thursday, warning there was an ongoing risk of high inflation becoming entrenched.

Senior Deputy Governor Carolyn Rogers, speaking the day after the central bank hiked its policy rate to a 14-year high of 3.25%, said the worry is businesses and consumers will start making long-term decisions based on today's high inflation.

"Monetary policy has to tighten a lot more to get inflation back down when you've got that kind of spiral happening so that's why we're focused on avoiding it," she said in a Q&A session after a speech to a Calgary, Alberta business audience.

"The front loading of interest rates is one of the key strategies we think will help us avoid that."

In her speech, Rogers reiterated interest rates needed to rise further, but did not specify how much higher, instead noting it would take up to two years for rate hikes to have their full effect on inflation.

"Getting inflation back to 2% will take some time. We also know there could be bumps along the way," she said.

That makes clear central bankers are "flying blind when it comes to how high rates need to rise," said Royce Mendes, head of macro strategy at Desjardins Group, in a note.

"If monetary policymakers have to make a choice between a recession and controlling inflation in the near-term, their actions will be guided by the latter," he added.

While Canada's inflation rate fell to 7.6% in July from 8.1% in June, the core measures of inflation continued to rise and were all at or above 5%, said Rogers.

"This shows how strong underlying inflation remains in Canada," she said. The central bank has so far sprinted ahead with 300-basis points worth of increases in just six months, outpacing its major economy peers.

The Bank of Canada in July forecast inflation would remain well above the 2% target in 2022 and 2023, before easing to 2% by the end of 2024. But upside risks remain, said Rogers.

"We know Canadians have accumulated extra savings during the pandemic, so there is a risk that consumer spending has more momentum than we expect, making inflation more persistent," she said.

"We keep thinking Canadians will draw it down," she later added, answering a question. "We haven't seen a lot of that yet."

The Canadian dollar was trading 0.1% higher at 1.3115 to the greenback, or 76.25 U.S. cents.