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OTTAWA: A C.D. Howe panel of economists is giving the Bank of Canada cover for possibly raising interest rates next week.

A slight majority of the nine panellists, who make recommendations in advance of the central bank's decisions, say governor Mark Carney should take the policy rate up another quarter point to 1.25 per cent.

And they go further, they urge Carney to keep hiking until the rate reaches 2.5 per cent next fall.

Those recommendations would open up even great space between the Bank of Canada and the U.S. Federal Reserve, which has been hinting it will go in the opposite direction, something that would likely further boost the soaring loonie.

Many private sector economists from Canada's big banks have tended to favour holding the policy rate at the current level until at least next spring.

They cite the slowing economy, growing uncertainty and the effect of higher rates on the Canadian dollar, which is already flirting with parity, as reasons for caution.