Elevated inflation pressures and rising energy costs from the Middle East conflict have lifted market-implied odds of a Bank of Canada rate hike in 2026 to 72.5%. Headline CPI held steady at 3.0% year-over-year in August, above the 2% target for several months, while core measures such as the trimmed mean and median remained near 2%. The Bank left the policy rate unchanged at 2.25% on September 2 but highlighted increased upside risks to its inflation forecast and readiness to respond if pass-through broadens. Parallel Federal Reserve tightening and potential Canadian dollar weakness add to the case for earlier normalization toward the neutral range. The October 28 meeting and fresh data on oil prices and trade developments represent key near-term catalysts for trader positioning.