This article originally appeared in the Financial Post. Below is an excerpt from the article.
By Philip Cross, June 24, 2026
The report added that “measures of core inflation that exclude volatile components, including food, continue to ease” and “most cost indicators are now rising at a pace broadly consistent with inflation around two per cent.” Its benign outlook for inflation was partly because “oil prices are assumed to be lower” — an assumption almost immediately blown up when they jumped after the onset of war in Iran. The prospect of their remaining high for an extended period promises another year of above-target inflation resulting from both the direct impact on gasoline and home heating oil and the indirect impact over time from rising input costs for everything from air transport to food.
The bank appears unperturbed about inflation overshooting its target. It was essentially self-congratulatory about almost returning inflation to its target rate in early 2026, highlighting in its January 2026 Monetary Policy Report that “CPI inflation remains near the two per cent target.”
The report added that “measures of core inflation that exclude volatile components, including food, continue to ease” and “most cost indicators are now rising at a pace broadly consistent with inflation around two per cent.” Its benign outlook for inflation was partly because “oil prices are assumed to be lower” — an assumption almost immediately blown up when they jumped after the onset of war in Iran. The prospect of their remaining high for an extended period promises another year of above-target inflation resulting from both the direct impact on gasoline and home heating oil and the indirect impact over time from rising input costs for everything from air transport to food.
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Philip Cross is a senior fellow at the Macdonald-Laurier Institute.
