Macklem in Bangkok: oil, tariffs and job losses test the Bank of Canada’s hike case

The Canadian dollar and short-dated Canada yields are most exposed if Macklem is drawn on policy. With October hike odds already slashed after the jobs data, any hawkish signal would carry more surprise value than a cautious one. Oil cuts both ways for Canada: higher crude supports the terms of trade and the currency, but it is also the main source of above-target inflation, so a sustained move in prices would shift both the inflation debate and the loonie. Tariff headlines remain a second source of volatility.---Earlier:Economic and event calendar in Asia Friday, October 16, 2026 - Federal Reserve Chair Warsh speakingBOE, Bailey, Bangkok. What could possibly go wrong? Preview and 3 questions for the GovernorPreview: Nagel and Klingbeil in Bangkok: three themes as the ECB weighs a December hike--- Macklem has argued the Bank can look through an oil shock only until it spreads, and two months of job losses have made markets doubt the spreading starts soon enough to justify an October hike.Summary:Macklem speaks on an IMF panel on AI and the global economy in Bangkok at 04:15 GMT (00:15 ET)The policy rate is 2.25%, unchanged since a cut in October 2025Headline inflation is above target on gasoline prices, while core measures sit near 2%New US tariffs and back-to-back monthly job losses have weakened the growth outlookMarkets have cut the odds of an October hike, but still lean towards a move by DecemberThe next decision is 28 October, with September inflation data due on Monday Bank of Canada Governor Tiff Macklem joins a panel on artificial intelligence and the global economy at the IMF and World Bank annual meetings in Bangkok on Friday. It comes less than two weeks before the central bank’s 28 October rate decision. The session is scheduled for 04:15 GMT (00:15 US Eastern), according to the Bank’s media advisory. The topic is AI rather than monetary policy, so any comments on rates would most likely come in response to questions.The policy rate stands at 2.25%, where it has been since a quarter-point cut in October last year, according to the Bank of Canada. Governing Council has held at every decision since. The most recent hold was on 2 September, when it said it was prepared to adjust policy as needed.Headline inflation is running above the 2% target, pushed up by higher gasoline prices linked to the Middle East conflict and damaged refining capacity. Core measures, however, have stayed close to target, and the Bank has said it sees little sign so far of energy costs spreading into wider prices. In a speech last month, Macklem said the Bank can look through the direct effect of higher oil, but only while those pressures stay contained. He added that it does not want to be too slow to respond if they broaden.The growth picture complicates the decision. The economy rebounded strongly in the second quarter. However, new US tariffs following the breakdown of Canada-US trade talks have clouded the outlook, and Macklem has warned growth could slow sharply late this year if they persist.The labour market has also turned. Canada shed jobs in both August and September, and the unemployment rate rose back to where it started the year. That points to continued slack in the economy.The jobs data shifted expectations. Markets scaled back the odds of an October hike to well below even after the September report, while still leaning towards a move by December. Some economists now expect the Bank to hold this month, though others had been forecasting an increase.Three questions matter if Macklem is drawn on policy:Inflation risk: whether he still sees energy-driven inflation as the bigger risk, or gives more weight to the weaker jobs market.Tariffs: how he judges the growth hit from US tariffs.October: whether he leaves the door open to a move this month. September inflation data on Monday is the next marker. This article was written by Eamonn Sheridan at investinglive.com.