Rising Oil Prices Raise Odds of Bank of Canada Rate Hike

Canada’s central bank could raise interest rates in the coming months as rising global crude oil prices increase inflationary pressures. Economists believe the Bank of Canada’s chances of raising rates by December are growing, despite Canada’s annual inflation rate remaining steady at 3% last month.

Economists at Desjardins Group and RSM Canada say it may be difficult for Bank of Canada officials to ignore oil prices above US$100 a barrel, particularly if the increase persists.

While core inflation remains under control for now, economists warn that continued oil price shocks could push the Bank of Canada to raise its policy rate by 25 basis points in December or during the first quarter of 2027.

However, Ruchir Sharma of Nomura Securities International expects interest rates to remain unchanged for the rest of 2026.