BOC Governor Macklem said the biggest near-term risk to inflation is how the Middle East situation develops, specifically how long oil prices remain elevated and how high they ultimately rise.

Iran’s Chamber of Commerce customs committee chair said U.S. sanctions and an economic blockade cannot completely stop the country’s foreign trade, citing Iran’s geography, regional ties and multiple trade routes. He said authorities are removing domestic trade barriers to ease business, exploring alternative channels to keep trade flowing under rising sanction pressure, and implementing trade pacts involving the Eurasian Economic Union and Shanghai Cooperation Organization. He added that bilateral and regional currency and financial agreements with neighbors are being used to smooth trade, reduce reliance on intermediary currencies, ease liquidity frictions and support non-oil exports.

Bank of Canada left its policy rate at 2.25% for a seventh consecutive meeting, in line with market expectations. Policymakers flagged rising uncertainty from an escalating tariff dispute with the United States after bilateral talks collapsed in late August; the U.S. has imposed 50% tariffs on hundreds of Canadian products and Canada has retaliated with counter-tariffs. The central bank cited higher fuel costs related to the Middle East conflict as a driver of headline inflation rising to 3.0% YoY — the first increase to that level since 2023 — while core inflation remains close to the 2% target. Officials said trade-driven tariffs add upside price risk and are weighing on growth, supporting a decision to keep short-term borrowing costs stable. BOC analysis indicates Canada’s retaliatory duties would further raise inflation.