Elevated energy prices from the ongoing Middle East conflict have kept headline Canadian CPI at 3.0% year-over-year in August 2026, prompting market-implied odds of a Bank of Canada rate hike sometime in 2026 to reach 66.5%. While core measures such as the trimmed-mean and median remained near 2%, traders are weighing upside risks of broader pass-through, alongside the Federal Reserve's recent tightening and potential Canadian dollar depreciation from higher U.S. rates. The BoC held its policy rate at 2.25% in September, citing uncertain growth from tariffs, but October 28 pricing and economist revisions now incorporate a higher probability of 25-basis-point moves later this year to return policy toward neutral.