The closely balanced 53.5% implied probability of a Bank of Canada rate hike in 2026 stems primarily from March CPI rising to 2.4% year-over-year, driven by a 21% surge in gasoline prices tied to Middle East energy disruptions, against the Bank’s April 29 hold at the 2.25% overnight target. Weak GDP growth forecasts of 1.2% for 2026 and subdued domestic demand have kept policy makers patient, with core measures and inflation expectations remaining anchored near target. Futures markets price modest tightening later in the year, while most economist surveys anticipate no change through December. The June 10 decision and July 15 Monetary Policy Report will be key catalysts, as any further pass-through of energy costs into broader prices could shift the balance toward a hike.