Bank of Canada Sees Elevated Inflation Risks Amid High Gas Prices

The Bank of Canada's governing council concluded that inflation would likely remain elevated in the near term when they met on September 2. The minutes from this meeting, released Wednesday, show policymakers stood ready to increase borrowing costs multiple times if inflation remained too high.

Members cited persistently high gasoline prices as a significant factor, noting that conflict in Iran had raised market expectations for oil prices. They also saw a higher risk of inflation spreading to non-energy goods and services across Canada.

The council found little evidence that elevated gasoline prices were being passed on to other goods and services. However, they concluded that heightened tensions in the Middle East would keep gasoline and diesel prices high, pushing headline inflation higher for longer than their July forecast.