The Bank of Canada’s October 28 decision to raise the policy rate 25 basis points to 2.5%—its first hike since 2023—anchors current trader sentiment ahead of the December 9 meeting. Persistently elevated energy prices from the ongoing Middle East conflict have pushed headline CPI to 3.1% year-over-year in September, with the Bank now projecting inflation near 3.5% by year-end and around 3% through much of 2027, materially above prior forecasts. Governor Tiff Macklem emphasized proceeding “one meeting at a time” given uncertainties around cost pass-through and growth, creating a closely balanced market-implied path that assigns 63% probability to no change while still pricing a 38% chance of another 25 basis-point increase. Fresh CPI and labor data releases in mid-November will shape whether the Governing Council views risks as sufficiently contained to hold or requires further tightening to anchor expectations.