The closely balanced 52.5% market-implied odds for a Bank of Canada rate hike in 2026 reflect divergent views on whether energy price pressures from the Middle East conflict will push inflation above target, outweighing soft GDP growth and U.S. tariff uncertainties. With the policy rate held at 2.25% through the April 29 decision, trader sentiment hinges on incoming data showing whether higher oil prices feed into core measures or remain transitory. Major bank forecasts split between no change through year-end and 75 basis points of tightening by December, underscoring the uncertainty. The June 10 rate announcement and July 15 Monetary Policy Report will likely provide key signals on the Governing Council’s tolerance for persistent inflation versus supporting economic activity.