Ontario Premier Dalton McGuinty took a rare foray into monetary policy Wednesday, urging the Bank of Canada not to hike its key interest rate.

Speaking at a Toronto elementary school, McGuinty said the recovery is still very fragile and Canada should be careful about doing anything that could drive up costs.

Ontario Premier Dalton McGuinty, shown in June, says fears that the U.S. could slip into a double-dip recession support his advice not to raise rates. (Darren Calabrese/Canadian Press)

"My advice to the Bank of Canada is: Just no more interest rate hikes — not at this point in time," he said.

"While we can say that the recovery has taken hold, it's not by any means a vigorous and robust recovery. It is modest."

The premier said fears that the U.S. could slip into a double-dip recession highlight the need for continuing prudence.

"Try as we might, we cannot completely uncouple ourselves from the American economy," McGuinty said.

"They're our single largest trading partner and consumer confidence — American consumer confidence — is a powerful factor in determining the health and vitality of our own economy here."

Ontario is also seeing higher inflation than other provinces, largely due to the July 1 implementation of the new Harmonized Sales Tax.

Consumer prices in Ontario rose 2.9 per cent in July — the largest year-over-year hike among the provinces — with the HST accounting for about 1.3 per cent of that increase. Canada's annual inflation rate rose by eight-tenths of a point to 1.8 per cent, according to Statistics Canada.

Canadian politicians usually refrain from public comments about monetary policy, out of respect for the bank's independence from political influence.

Bank next meets Sept. 8

The central bank will meet Sept. 8 to set interest rates.

After a report on Tuesday that showed Canada's economy slowed more than expected in the second quarter, there are growing doubts that the bank will hike rates further.

Canada's GDP fell to an annual rate of two per cent in the April-to-June quarter, down from 5.8 per cent in the first quarter.

The bank has raised rates twice since June after keeping them at a record low 0.25 per cent for more than a year.

The rate is now 0.75 per cent.

With files from The Canadian Press