Uncertainty Rules
A brief oil price surge prompted by conflict in the Middle East has resulted in upticks in headline inflation. So far, price increases have been largely contained to costs for energy and its immediate economic neighbours, but central banks are alert to signs of spreading inflation pressures. The risks to the inflation outlook are tilted to the upside, including the possibility of consumer inflation expectations de-anchoring, a more prolonged period of elevated oil prices, and broader cost pass-through than currently anticipated.
What is our forecast over the next few years in light of the fact that inflation is edging up? What is the impact of the U.S.–Middle East war on the inflation expectations of consumers? What are our expectations of higher U.S. interest rates on the Canadian dollar? When will interest rate stability be achieved in Canada and the United States?
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