🇨🇦In Canada, the market odds of an October rate hike went from about 25% just a few days ago to 84% at present. What happened? Tiff Macklem said over the weekend at the IMF that the Bank of Canada will be increasing its inflation forecast. He also flagged a higher risk of broader inflation from oil prices, and noted the dual dynamic of higher oil prices + higher inflation and how that reduces the case for easing (recall Canada is a massive net exporter). Inflation data came out on Monday morning after his remarks. Core measures (trim + median) printed at 1.8% and 1.9%, respectively - both below target. Headline printed at 3.1% as gasoline was up 6.1% in the month. The highest headline has been this year was 3.2% in May (prior 3 months were 3.0%, 3.0%, and 2.8%). The number of items running >3% fell to 32% from 36%, a positive development. So even though the latest inflation print was fine, the market is still expecting a hike next week. It seems like Macklem is looking more towards forward looking data and fading backward looking data, but it still begs the question - does the BoC need to see actual evidence of broad-based inflation pressures from energy prices, or do elevated energy prices justify moving sooner rather than later? Macklem did note over the weekend that recent Iran developments were an escalation, and he did not sound too optimistic on the prospects of improvement in the near term.