OTTAWA, Sept 9 (Reuters) – The Canadian economy is moving closer to the point where the Bank of Canada will no longer need to continue adding stimulus to the economy through its quantitative easing (QE) program, but it is not there yet, Governor Tiff Macklem said on Thursday.

Macklem, in a speech the day after the central bank held its key interest rate at 0.25%, also said for the first time that when the Bank of Canada reduces stimulus it will do so by hiking rates before curbing its holdings of government bonds.

“As the recovery progresses, we are moving closer to a time when continuing to add stimulus through QE will no longer be necessary. We are not there yet,” Macklem said.

“Eventually, when we need to reduce the amount of monetary stimulus, you can expect us to begin by raising our policy interest rate,” he added in a webcast to a Quebec business group.

Macklem said the first step, once new stimulus is no longer needed, would be…

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