Rising energy prices from Middle East tensions have lifted headline inflation risks, with August CPI at 3.0% and September data due October 19 likely higher, prompting analysts like UBS and Oxford Economics to anticipate 25-basis-point hikes at the October 28 or December Bank of Canada meetings. This underpins the 68.5% market-implied probability of at least one 2026 rate increase from the current 2.25% policy rate. Countervailing forces include softening labor data, with September job losses pushing unemployment to 6.5%, and tariff-related growth uncertainty, leading firms such as TD Securities to project a hold through year-end. Traders are balancing these inflation pressures against subdued domestic demand when assessing the path to neutral policy.