Macklem says Bank of Canada will sharply raise its inflation forecast as oil prices stay high
Bank of Canada Governor Tiff Macklem said on Saturday, October 17, that the bank expects to raise its quarterly inflation forecast significantly this month, Reuters and the Globe and Mail reported. Reuters said he pointed to persistently high crude oil and petroleum product prices, the Middle East conflict and refinery damage. He asked whether inflation would return toward target on its own or whether the bank would have to raise rates, according to Reuters. New forecasts arrive with the October 28 rate decision, and the policy rate is 2.25 per cent, CTV News reported. Statistics Canada's September inflation data is due Monday, the Globe and Mail reported. Radio-Canada and Le Devoir reported he also said global resilience is being severely tested.
The central bank sets rates with projections in hand, so a sharply higher inflation forecast raises the chance it will lean toward raising, not cutting, borrowing costs. Oil feeds quickly into fuel and transport prices, and the bank looks at whether higher prices spread into wages and other goods. Monday's September inflation reading is the first hard data point before the October 28 decision.
If you have a variable-rate mortgage or credit line, a higher inflation outlook can mean higher payments later. Fixed-rate borrowers renewing soon should ask lenders how they are pricing in the October 28 decision. Everyone buying fuel and groceries will feel the energy-price effect that Mr. Macklem described.
Hawkish readings, as in Reuters coverage, stress that Mr. Macklem raised the risk that inflation becomes more persistent and openly asked whether rate increases will be needed. On this view, the bank is preparing markets for tighter policy if energy prices stay high.
A more cautious reading, evident in earlier coverage of the bank's stance, notes that the bank has said it would look through temporary energy shocks and that the economy has slack and a soft labour market. On this view, higher forecasts do not by themselves mean higher rates.
Known: Mr. Macklem expects a significantly higher inflation forecast, cites oil, the Middle East conflict and refinery damage, and has put the decision date at October 28. Unknown: what the bank will decide, how much the forecast rises and what September's inflation number shows. Watch Monday's Statistics Canada release, then the October 28 statement.
DailyDrop Canada edition No. 14 · Morning · SUN., OCT. 18, 2026