Macklem warns high energy prices will push the inflation forecast higher

Why oil stays high

• Houthi attacks on Saudi Arabia
• Damaged Gulf refining capacity
• The Strait of Hormuz is closed

Speaking Saturday in Bangkok at International Monetary Fund meetings, Bank of Canada Governor Tiff Macklem said no relief is in sight for global oil prices. He cited Houthi attacks on Saudi Arabia, damaged refining capacity in the Gulf and the closure of the Strait of Hormuz.

July's forecast for late this year

2.5 %

Macklem expects the bank's new inflation forecast to be significantly higher than July's, which projected inflation easing to about 2.5 per cent in the second half of this year.

"The question we're going to ask ourselves is: is inflation likely to come back to our target on its own, or will we have to raise interest rates to influence its path?"

— Tiff Macklem, Bank of Canada governor

And us?

Global oil prices feed into what Canadians pay for gasoline, diesel and heating oil. Inflation in Canada has held at 3 per cent for two months, above the bank's 2 per cent target.