Elevated headline inflation near 3% and upside risks from energy prices and trade tariffs have created a tight contest in trader sentiment for the Bank of Canada’s December 2026 decision, with implied probabilities nearly even between holding the 2.25% policy rate and a 25-basis-point hike. The Bank held rates unchanged through September amid a stable labor market with unemployment around 6.4% and GDP showing modest recovery, yet core measures remain closer to the 2% target while supply-side pressures persist. This balance leaves the path sensitive to incoming data, including the September CPI release and the October 28 announcement with its updated Monetary Policy Report, as markets assess whether inflation risks warrant tightening before year-end or if subdued growth will keep policy on hold.