Bank of Canada Warns of Elevated Inflation Risks Amid Ongoing Global Tensions
The Bank of Canada's governing council assessed elevated inflation risks at its September meeting, according to minutes released on Wednesday. The central bank maintained its benchmark rate at 2.25% on September 2, with Governor Tiff Macklem indicating that policymakers stood ready to increase borrowing costs multiple times if inflation remained too high.
The minutes showed members cited persistently high gasoline prices, noting that conflict in Iran had raised market expectations for oil prices. The council saw a higher risk of inflation spreading to non-energy goods and services across Canada.
Members found little evidence that elevated gasoline prices were passing through broadly to other goods and services. However, they concluded that heightened tensions in the Middle East, protracted conflict, and damage to refining capacity would keep gasoline and diesel prices high, pushing headline inflation higher for longer than the bank's July forecast.