Macklem Warns Bank of Canada Will Lift Inflation Forecast

Bank of Canada Governor Tiff Macklem said on Saturday, October 17, that the bank expects to raise its quarterly inflation forecast significantly this month. He spoke to journalists on a call from Bangkok, where he was attending the IMF and World Bank annual meetings. Reuters reported the remarks.

The reason is energy. Crude oil and petroleum product prices have stayed high. Macklem said the new forecasts will feed into the rate decision on October 28.

He warned that the price pressure may not stay contained. With the Middle East conflict ongoing, shipments still curtailed and refinery capacity damaged, he said: "the risk that inflation broadens and becomes more persistent has gone up."

Market reports this week put the scale in view. Brent crude settled at $109.86 a barrel on Friday after touching $110, and shipping through the Strait of Hormuz remains curtailed.

The choice on October 28

Macklem set out the question for the October 28 decision. The bank must judge whether inflation comes back down toward target on its own, or whether the bank must raise rates to nudge it back.

He held to the target. He said: "Our beacon is our 2 percent inflation target, and we are committed to keeping inflation close to target over time. We are prepared to adjust monetary policy as needed."

Money markets do not expect a move right away. Markets price no change on October 28 or at the December meeting. They price in 100 basis points of increases over the course of next year. That gap matters. If the bank holds this month while warning that inflation risk has risen, households and firms will watch the wording for a signal on next year.

Why it matters

An inflation forecast lift changes the debate even before rates move. Mortgage holders and borrowers price their plans off the path they expect. Businesses set prices and wage offers off the same path. If a central bank says inflation is more likely to broaden and persist, those plans shift early.

Macklem also spoke about the wider economy. He said the global economy had shown resilience despite the Middle East conflict and the Russia-Ukraine war. He said that resilience is being tested by higher costs and tighter financial conditions. He said governments have less fiscal room and need to rebuild it.

What happens next

The quarterly forecasts land this month with the October 28 decision. Traders will read the size of the inflation lift and the language on persistence. The next data on prices and on oil shipments will test the bank view. If inflation broadens beyond energy, market pricing for 100 basis points of increases next year will look less like a hedge and more like a forecast.

Sources Reuters via Q101.9: https://q1019fm.com/2026/10/17/bank-of-canada-sees-sharply-higher-inflation-outlook-as-oil-surges-macklem-says/ Reuters via 102.7 Super Hits: https://1027superhits.com/2026/10/17/bank-of-canada-sees-sharply-higher-inflation-outlook-as-oil-surges-macklem-says/