The uptick in headline inflation was driven by an energy supply shock, including a 28% increase in gasoline prices, confirming warnings from Governor Tiff Macklem that surging oil would pressure the inflation outlook. While swap market data showed the probability of an October hike dipping to 68% from 74% immediately following the inflation report, expectations for policy tightening have since rebounded among market analysts.
Wednesday, October 21, 2026
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Bank of Canada Rate Hike Bets Rise as BMO Predicts 25 BPS Increase
Global Markets1 day ago
Canada's annual price growth accelerated to 3.1% in September, coming in below a forecast of 3.2% as energy costs rose. BMO expects the Bank of Canada to hike interest rates by 25 BPS next week, reflecting a broader trend where traders and economists have increased their bets on a rate hike, as reported by Bloomberg. Underlying inflation continued to cool during the period, with the central bank's preferred core measures averaging 1.85%, the lowest level in 6 years, and monthly CPI rising 0.1%.
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