Rising inflation pressures, with Canada’s CPI holding at 3.0% year-over-year in August amid higher oil and transportation costs, have lifted market-implied odds of at least one Bank of Canada rate hike in 2026 to 68.5%. The policy rate remains at 2.25%, the lower bound of the neutral range, after seven consecutive holds, but recent analyst shifts from UBS, Manulife, and Oxford Economics now incorporate 25-basis-point increases by year-end. Counterbalancing factors include weak September employment data showing job losses and a 6.5% unemployment rate, alongside trade uncertainties that support a cautious stance from firms like TD Securities. Key near-term catalysts include the September CPI release on October 19 and the October 28 policy decision, where overnight index swaps price roughly a one-third chance of an immediate move.