BoC Governor Macklem says since its last decision, the conflict in the Middle East has persisted without a clear path to resolution

• Closer to home, US has imposed new tariffs on Canadian exports, and the Canadian government has responded with proportionate counter-tariffs and new supports for hard-hit businesses and workers.
• The increases in exports, investment and hiring are broadly consistent with what businesses have told us—they are adapting to tariffs, new technology and increased uncertainty. Overall, the data reaffirm our view of a broadening recovery.
• Market expectations for oil prices have shifted up since July. The Bank has been looking through the direct impact of higher oil prices on inflation, but we’re monitoring closely for any signs that they are spreading to the prices of other goods and service.
• Monetary policy cannot offset the effects of tariffs or influence global energy prices. What we can do is ensure global developments don’t jeopardize price stability in Canada.

• First, economic growth in Canada has picked up after stalling over the past year. That puts us on a stronger footing as we face new challenges. But uncertainty about the sustainability of the rebound has increased with new US trade actions.
• Second, the ongoing conflict in the Middle East is keeping energy prices higher for longer, and this has increased the upside risks to the outlook for inflation.
• Third, the BoC is committed to keeping inflation close to the 2% target over time. We will be a source of stability as Canadians navigate shifting global developments.

This is the standard supply-shock framing the Bank of Canada has used repeatedly when caught between tariff-driven weakness and energy-driven inflation risk: look through the first-round price level effect, guard the second round. The operative distinction is between the direct oil pass-through, which the Bank explicitly says it is ignoring, and any broadening into core goods and services, which is the stated trigger for a response. That language has historically kept front-end Canadian rates sensitive to core inflation prints rather than to the headline, and it leaves the policy signal deliberately two-sided: the growth rebound is acknowledged, but the emphasis on upside inflation risk leans against near-term easing. On trade, the line that monetary policy cannot offset tariffs is the familiar pre-commitment heard from central banks facing supply-side shocks, and it has typically preceded patience rather than action while the drag and the price effects are separated. Worth watching are whether other Governing Council members echo the second-round concern, how core measures excluding energy behave, and whether tariff retaliation escalates, since escalation shifts the growth side of the trade-off. As commentary rather than a decision, the signal is directional and consistent with a hold-and-watch stance.