Expect 50bps of BoC hikes by January, says Oxford Economics
Oil lifts headline inflation, not yet core
Consumer prices rose 3.1% year over year in September, up from 3.0% in August, with gasoline up 27.8%, CMP reported. The Bank’s preferred core measures, CPI-trim and CPI-median, averaged 1.9%.
Oxford expects headline inflation in the mid-3% range in late 2026 and early 2027. It assumes Brent crude stays above US$100 a barrel for the next six months. Oil hit $117 a barrel on Oct. 23, Reuters reported.
Governor Tiff Macklem has grown more wary. Speaking at IMF meetings in Bangkok, he warned that “the risk that inflation broadens and becomes more persistent has gone up,” RBC economist Abbey Xu noted.
Others see less urgency. Dominion Lending Centres chief economist Sherry Cooper said last week: “Today’s inflation report reinforces our view that higher gasoline prices temporarily boost headline inflation while further eroding household purchasing power. However, these energy-driven increases, largely tied to geopolitical tensions, are unlikely to trigger a broader resurgence in underlying inflation.”
Oxford, too, expects slack and slower shelter inflation to keep core inflation from rising sharply. Still, it called the October decision “a toss-up” after softer jobs and inflation data, adding: “even if it doesn’t hike in October, we still anticipate it’ll lift the overnight rate by a cumulative 50bps by January.”
