The financial regulator for the globe's most industrialized nations says that the Bank of Canada should begin increasing interest rates without delay to battle price rise.

The Organization for Economic Co-operation and Development said in a report released on Wednesday that the central bank should tighten its policy lending rate slowly, but without any holdup.

The OECD said in its latest Economic Outlook that the Bank of Canada should begin standardizing its policy rate immediately and constrict slowly through 2011.

The OECD added, "Governments should let remaining temporary stimulus measures expire to avoid over-stimulating the economy as it recovers on its own".

It forecasts that Canada's economy will develop by 3.6% this year and 3.2% in 2011.

This prediction is more positive than the one issued by the group in November that expected development of 2% this year and 3% in 2011.

According to the report, the economy is recuperating strongly from the slump trough, aided by an improving trade sector and policy actions.

The report said that unemployment should keep falling and inflation strains should continue to remain silent.

The OECD also observed that the soaring rate of family insolvency is a source of threat to the attitude.