Macklem said inflation remains too high in Canada, concentrated in gasoline and energy prices. He identified developments in the Middle East — and how long and how far oil prices stay elevated — as the main upside risk and said the BOC will closely monitor inflation data and act accordingly. The central bank’s tolerance for high inflation is limited; if inflation is judged persistent, multiple rate hikes may be required, though rate increases are not the only response and the BOC is prepared to

Macklem said inflation remains too high in Canada, concentrated in gasoline and energy prices. He identified developments in the Middle East — and how long and how far oil prices stay elevated — as the main upside risk and said the BOC will closely monitor inflation data and act accordingly. The central bank’s tolerance for high inflation is limited; if inflation is judged persistent, multiple rate hikes may be required, though rate increases are not the only response and the BOC is prepared to adjust policy as needed. He said the Canadian economy is holding up amid a new phase of trade tensions, but recent U.S. tariff measures will weigh on Q4 growth. Macklem also noted spillovers from higher global bond yields into Canada and said those effects will be factored into policy decisions; if policy fails to meet its objectives, markets will reprice.