Thunder Bay – World News – The words out of Bangkok this weekend landed are likely to impact Canadian businesses and Canadian families.
Bank of Canada governor Tiff Macklem told reporters that persistently high global energy prices are set to push up the outlook for inflation across the country, a warning that carries extra weight here in Canada, where the price of a barrel of oil shapes paycheques, pension funds and household budgets alike.
Macklem spoke Saturday from the sidelines of the International Monetary Fund meetings in Bangkok.
Macklem said the message from his counterparts at the summit has largely been one of cautious relief: the global economy has held up better than expected despite the wars in Iran and Ukraine, widespread trade disruptions and higher borrowing costs tied to rising bond yields.
But he was careful to note that this resilience is wearing thin.
“You can only release strategic energy, oil reserves so many times, but that has helped contain this energy price shock,” Macklem said, pointing out that one of the tools countries have used to soften oil price spikes, tapping into strategic reserves, is running low.
He also flagged a troubling escalation in the Middle East. Houthi attacks on Saudi Arabia, combined with damage to refining capacity in the Gulf region and the closure of the Strait of Hormuz, mean there is little hope for relief on global oil prices any time soon. For a city whose economy is so closely tied to the energy sector, that combination of pressures is worth watching closely.
Those global forces work their way directly into what Canadians, including Calgarians, pay at the pump and for home heating. Macklem noted that higher energy costs abroad feed through into gasoline, diesel and heating oil prices at home.
The timing matters. The Bank of Canada will release updated economic and inflation forecasts alongside its next interest rate decision on Oct. 28.
Canada’s central bank is mandated to keep inflation at a two per cent target, but inflation has held steady at three per cent for two months running. Macklem said he expects the updated forecast to be “quite a bit higher” than the one issued in July, which had projected inflation cooling to around 2.5 per cent by the second half of this year.
Statistics Canada will offer an early look at how domestic prices are responding to these global pressures when it releases its September inflation report on Monday. So far, the Bank of Canada has been willing to look past near-term inflationary effects tied to the war in Iran, but Macklem has increasingly signalled that policymakers are growing more concerned.
“The question we’re going to be asking ourselves is, is inflation likely to come back down towards our target on its own, or are we going to have to raise interest rates to influence the path?” he said.
Despite the headwinds, Macklem struck a note of confidence in Canada’s overall position. He pointed to the relative stability of the Canadian dollar against its American counterpart as a sign of both recent U.S. dollar weakness and outside confidence in Canada. “Canada is a well-governed, good partner. We’re starting to see some recovery and investment. Companies are adapting to the increased tariff uncertainty. And I think that confidence is reflected,” he said.
What it means for residents
For Calgarians, this is a story that touches daily life directly, not just the markets. Higher energy prices abroad could mean more expensive fill-ups and heating bills this winter, even as the Bank of Canada weighs whether to raise interest rates to keep inflation in check. Anyone with a mortgage renewal coming up, or plans to borrow for a vehicle or home improvements, should keep an eye on the Oct. 28 rate decision and the inflation data due out Monday from Statistics Canada.
The impact of higher energy costs isn’t abstract. They show up in increased grocery bills, raised gas prices and the interest rates paid on a line of credit.
Watch for Statistics Canada’s September inflation figures on Monday and the Bank of Canada’s full rate announcement on Oct. 28 for a clearer sense of what comes next.
