Elevated Canadian CPI at 3.0% year-over-year in August 2026, driven by 22.8% higher gasoline prices amid ongoing Middle East conflict, has kept inflation above the Bank of Canada’s 2% target and prompted hawkish signals from policymakers. The September 2 decision held the overnight rate at 2.25% for the seventh consecutive meeting, yet minutes released September 16 highlighted increased upside risks from energy costs potentially spilling into broader prices and business costs tied to U.S. tariffs. Governing Council members noted readiness for multiple rate hikes if second-round effects materialize, even as core measures hover near target and the economy shows excess supply. With two remaining 2026 meetings on October 28 and December 9, market-implied odds of 69.5% for at least one hike this year reflect trader focus on inflation persistence versus growth uncertainty.