The Bank of Canada Has Looked Through Two Oil Shocks This Year Already. A Third Just Arrived Before July 15.

Line chart showing Canada's headline inflation climbing to 3.2 percent through May 2026, driven mainly by energy prices.

Canada's headline inflation climbed from 1.8 percent in February to 3.2 percent by May, a run the Bank of Canada has attributed largely to energy prices tied to the Middle East conflict. Core inflation has stayed closer to two percent, letting the Bank hold its overnight rate three times while calling the effect temporary. A fresh US sanctions snapback over the Strait of Hormuz this week tests whether that underlying conflict, and the inflation it has driven, is still temporary heading into the Bank's July 15 decision.

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Line chart showing Canada's year-over-year CPI inflation easing to 2.8 percent in June 2026.

June's cooler reading was driven by a temporary drop in gasoline prices tied to a ceasefire that has since collapsed, with Brent crude back…

June's Cooler Inflation Print Rested on a Ceasefire That Has Already Broken

July 24, 2026

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Line chart comparing WTI crude oil prices to the Bank of Canada's 70 to 75 dollar forecast assumption band.

The Bank of Canada's July 15 Monetary Policy Report projected inflation returning to 2% by early 2027, built on oil settling between $70 and $75 a barrel.

The Bank of Canada's Path Back to 2% Assumed Oil at $70 to $75. It's Trading Near $84.

July 20, 2026

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