Monday brings the Bank of Canada’s last full evidence set before its October 28 decision: September consumer prices, and at 11:30 ET the third quarter Business Outlook Survey and Canadian Survey of Consumer Expectations, the bank’s own advisory confirms.
RBC Economics expects headline inflation to hold at 3.0 percent annually in September for a third consecutive month, with energy inflation accelerating as gasoline and furnace oil prices rose from August and food inflation continuing to moderate. Excluding food and energy, RBC expects core inflation to edge down to 1.8 percent from 2.1 percent in August, and its diffusion index showed the share of the consumer basket rising faster than 3 percent annually at 35 percent in August, well below 54 percent a year ago, which it reads as no problematic broadening so far. The same diffusion measure for industrial producer prices has pointed the other way, and RBC’s judgment is that energy prices would need to stay high for that pressure to reach store shelves.
The surveys carry the expectations question. Business sentiment weakened in the second quarter on higher fuel costs and trade uncertainty, and the third quarter survey period, early to mid August, coincided with rising oil prices and new United States Section 338 measures imposed on August 22. RBC expects another uptick in firms’ short-term inflation expectations with longer-term expectations still anchored near the 2 percent target.
That is precisely the split Governor Tiff Macklem put at the centre of the decision on October 17, when he said the bank will raise its inflation forecast significantly this month and framed the question as whether inflation returns to target on its own or the bank must raise rates to nudge it back. Money markets price no change on October 28 or in December and 100 basis points of increases over next year, so Monday’s releases move the 2027 slope before they move the decision itself.