Oil Has Fallen 14% Since the Bank of Canada Hiked on It
The Bank of Canada raised its policy rate to 2.5% on October 28 to stop an oil shock from becoming an everything shock. On November 10 it published its own account of that meeting, and the heaviest leg of the case it made there is the price of oil staying high. Since the day of the decision the NYMEX WTI December contract has fallen 13.9%.
Statistics Canada releases October’s Consumer Price Index on Monday November 16 at 8:30 a.m. ET. It is the last consumer price reading Governing Council sees before its December 9 decision, because November’s CPI does not print until December 14, five days after the meeting.
The Bank built its case on costs, with oil as the heaviest leg
The October 28 press release framed the increase as prevention. Governing Council moved “to reduce the risk that continuing high energy prices spread broadly to the prices of other goods and services”, and the forecast behind it ran well past this winter: inflation was expected “to rise to about 3½% by the end of the year” and “to average 3% in 2027, a percentage point above the July projection”.
The reasoning arrived four days ago in the Governing Council’s summary of deliberations. The barrel comes first: “the benchmark price of oil was approximately US$35 higher per barrel than assumed in the July Report. The oil futures curve had shifted up and out, as markets increasingly expected oil prices to remain higher for longer.” Members treated the scenario as settled, noting that “A higher-for-longer oil price scenario comparable to the one outlined in the April Report had unfortunately come to pass.”
Oil is not the only leg. Members also named “higher costs from non-energy imports, both final goods and inputs into the production process”, including “oil-derived products such as chemicals, plastics and rubber, as well as semiconductors and other computer components whose prices had risen due to strong demand for AI-related equipment.” They judged that “downside risks to the inflation outlook had also diminished since the July Report”, and that a better growth outlook meant slack would be absorbed and would offset cost pressures less.
What was conditional was never whether those costs reach consumers. Governing Council “agreed that continued cost pressures would eventually pass through to consumer prices”, on the strength of “historical experience and the Bank’s surveys”. Core measures “remained near 2%”, but “cost pressures were building and would eventually be reflected in core measures”. What members divided on was how fast and how far, having “shared a diversity of views on the likely speed and extent of pass-through.” Then the hinge:
“The extent and speed of this transmission would depend on the persistence of the energy shock. The longer energy prices stayed high, the more likely the associated cost increases would flow through production and distribution networks and affect a wide range of consumer prices.”
Persistence is what carries energy costs into the rest of the basket, and persistence is the leg that has moved since October 28.
Oil and the pump have both fallen since the decision day
On decision day the December NYMEX WTI contract settled its window at US$102.76. On Friday November 13 the same contract printed US$88.51, down 13.87%, or US$14.25 a barrel. Both ends sit on the December contract, so no roll distorts the comparison. Source: NYMEX WTI, December contract, settlement-window price, our calculation from Yahoo Finance trade data.
That gives back part of a gap the Bank sized at about US$35 a barrel against its July assumption, which dents the premise rather than retiring it. The hike was also taken against a projection rather than a spot price, and sixteen days of a falling front month does nothing to a forecast that runs through 2027.
A cheaper barrel eases the Bank’s problem and removes two tailwinds at the same time, because the deliberations also record that “higher global oil prices were boosting investment in the oil and gas sector” and that energy exports “grew strongly” in the second quarter. That is the live question for holders of Canadian energy stocks: the page ranks the names on what survives a lower barrel rather than on what they earn at the highs.
Natural Resources Canada’s daily pump price survey put the Canada average for regular gasoline at 180.3 cents per litre on October 28 and 156.9 on November 13, down 13.0% from decision day and 13.5% from the 181.4 of October 1. The panel’s peak was 195.0, on September 17.
Canada’s average pump price for regular gasoline, daily, with the October 28 rate increase marked. Source: Natural Resources Canada, September 15 to November 13, 2026.
The core measures the Bank watches have kept falling
The measures Governing Council cited are not drifting up toward the headline. From Statistics Canada table 18-10-0256, with the headline computed from the all-items index:
| Month | Headline | CPI-trim | CPI-median | CPI-common |
|---|---|---|---|---|
| Jan 2026 | 2.3% | 2.4% | 2.5% | 2.7% |
| Apr 2026 | 2.8% | 2.0% | 2.1% | 2.6% |
| Jun 2026 | 2.8% | 1.9% | 1.9% | 2.6% |
| Jul 2026 | 3.0% | 1.9% | 2.0% | 2.7% |
| Aug 2026 | 3.0% | 1.9% | 2.0% | 2.6% |
| Sep 2026 | 3.1% | 1.8% | 1.9% | 2.4% |
CPI-trim at 1.8% is its lowest since December 2020, and the headline now runs 1.3 points above it, the widest that gap has been since November 2022. CPI-median at 1.9% is below target as well, though it was 1.9% in June too.
Statistics Canada’s September CPI release shows the same split underneath. CPI-common, the third measure in the table, is the one still above target, at 2.4% in September after 2.6% in August. The release has 2.2% excluding gasoline after 2.4% in August, and 2.1% excluding energy. Shelter went the other way, rising 1.8% after a 1.5% increase in August, with rent up 2.8%.
Monday’s base effects pull in opposite directions
What a year-over-year rate does next depends on the month dropping out of it. All three indexes here drop the same month, October 2025, and that month treated them very differently. All the arithmetic below is ours on Statistics Canada’s published indexes, table 18-10-0004, holding the October 2026 index at its September level.
| Index | Oct 2025 | Sep 2026 | Annual rate if October holds flat |
|---|---|---|---|
| All-items | 165.3 | 170.0 | 2.84% |
| Excluding gasoline | 163.8 | 166.8 | 1.83% |
| Gasoline | 199.4 | 267.6 | 34.2% |
Gasoline is set up to accelerate because its index fell 4.8% in October of last year, from 209.4 to 199.4. Its annual rate in September was 27.8%. Take this October down 3% instead of flat, roughly what the pump survey did between its second-half-of-September average of 188.9 cents and its October average of 183.0, and the annual rate is still 30.2%. All-items and ex-gasoline run the other way, because both of those indexes rose in October 2025, by 0.24% and 0.37%. For the headline to merely hold at 3.1%, all-items has to climb from 170.0 to 170.41, and its last two monthly moves were -0.06% and +0.12%.
So the shape to expect is gasoline’s own rate jumping above 30% while the headline and the ex-gasoline rate both fall, with ex-gasoline at 1.83%, below the 1.98% of April on the same arithmetic. That sets the thresholds for Monday. The pass-through case gains evidence if the ex-gasoline rate breaks its run of declines and CPI-trim turns up off 1.8%. Another trim reading at or below 1.9% alongside ex-gasoline under 2% is the opposite reading: the energy shock still bottled inside energy.
The mandate is the headline, and the target has just been renewed unchanged
The mandate in force is a 2% target on the headline CPI inside a 1% to 3% control range, applied symmetrically, with misses above and below weighted alike. On November 5 the Bank and the federal government renewed it without altering it. The renewed monetary policy framework holds that “The inflation target will continue to be 2%, the midpoint of the 1% to 3% inflation-control range, with inflation measured as the 12-month rate of change in the consumer price index”, and it runs another five years, “from January 2027 to December 2031”.
That standard is the headline. Not CPI-trim, not CPI-median. At 3.1% the headline sits near the top of the range and has been around 3% since April, and the Bank’s own estimate of how long that lasts without any pass-through at all is in the deliberations: “the energy shock alone would keep CPI inflation at around 3% for more than a year.” Letting the published rate sit near the ceiling that long because the measures beneath it look fine means staking the anchor on a forecast.
The case for holding was in the room too. Inflation’s rise “had so far been concentrated in energy prices and in services that rely heavily on energy inputs, such as airfares”, and members agreed on the limit of the tool: “while monetary policy cannot lower global energy prices, it can prevent them from leading to generalized inflation.”
The market prices 62% of a December hike, and more than a hike by February
Friday November 13 settlements, read off the Montreal Exchange’s one-month CORRA futures board:
| Contract month | Settlement | Implied average CORRA | Open interest |
|---|---|---|---|
| November 2026 | 97.4800 | 2.5200% | 1,059 |
| December 2026 | 97.3700 | 2.6300% | 124 |
| January 2027 | 97.3050 | 2.6950% | 167 |
| February 2027 | 97.1650 | 2.8350% | 700 |
A COA contract settles to the average of daily CORRA over its calendar month, so 100 minus the price is the expected average overnight rate. November holds no decision, so its implied 2.5200% against a 2.50% target is the market’s own read of the funding basis, 2.0 basis points. The December 9 decision takes effect the next day, splitting that month into 9 days at the current rate and 22 at whatever the meeting produces. So 2.6300% times 31 is 81.530, less 9 days at 2.5200%, or 22.680, leaves the final 22 days averaging 2.6750%, and stripping the basis gives an implied target of 2.6550%. That is 15.5 basis points above 2.50%, or 62% of a quarter point. Readers who want the full derivation can see how the contract prices a Bank of Canada decision.
On the November 3 board, as we reported it the next day, the same calculation gave 12.7 basis points, or 51% of a hike. Eight sessions later it is 62%. Two things in that window pushed the other way: oil fell, and the unemployment rate rose to 6.7% in October from 6.5% in September on Statistics Canada’s seasonally adjusted Labour Force Survey for those 15 and over. A third thing in the window read hawkish. The deliberations were published on November 10, and their closing line is that “there could be a need to increase the policy rate further, but given the uncertainty, they would take monetary policy decisions one meeting at a time with the benefit of the best available information.”
December’s own contract is too light to carry much weight. Its open interest halved over those eight sessions, from 242 lots on November 3 to 124 on Friday, against 1,059 in the November contract. A 2.8 basis point move in a contract that thin is weak evidence of anything, and 62% is better read as a number we can compute than as a number the market has committed to.
The deferred month is where the positioning went. February’s open interest went from 50 lots on November 3 to 700 on Friday, and at an implied average overnight rate of 2.8350% it sits 31.5 basis points above the November contract, which is more than a full quarter point of tightening priced by late winter. That is a borrowing-cost path rather than a single decision. It prices floating-rate debt directly and anchors the curve that term debt is refinanced against, which is why it reaches Canadian REITs directly: their distributions are paid out of cash flow that has to absorb debt as it is rolled.
What Monday can and cannot settle
Monday can tell the Bank whether cost pressure has reached the parts of the basket that have nothing to do with the pump. CPI-trim, CPI-median and the rate excluding gasoline are where that shows. It cannot tell the Bank whether the energy shock has persisted, because October’s index is built from October’s prices and most of the fall in crude and at the pump came in November. And whatever it shows, the leg the barrel never touched is still standing: cheaper oil does not lower the price of a semiconductor.
Governing Council set itself a sequential standard, deciding one meeting at a time on the information available at the time. Between Monday and December 9 the rest of that information arrives on a known schedule: October producer and raw materials price indexes on November 19, which is the supply-chain side of the same transmission question, third-quarter GDP on November 30, and the November Labour Force Survey on December 4. The next CPI lands on December 14, after the decision is made.
Oil, pump and CORRA futures data are as of Friday November 13, 2026. CPI and core measures are as of the September 2026 release, published October 19, 2026.
Disclaimer: The content on bestcanadianstocks.ca is for informational and entertainment purposes only and does not constitute financial advice. Past performance is not indicative of future results. Always consult a qualified financial advisor before making investment decisions. Bank of Canada quotations are from the October 28, 2026 rate announcement, the Summary of Governing Council Deliberations for that decision published November 10, 2026, and the joint statement renewing the monetary policy framework of November 5, 2026. Inflation figures are Statistics Canada’s, from the September 2026 Consumer Price Index release and tables 18-10-0004 and 18-10-0256. Pump prices are Natural Resources Canada’s daily retail survey. Oil is NYMEX WTI on the December contract at the 2:28 to 2:30 p.m. ET settlement window, the same contract at both ends of every comparison, our calculation from Yahoo Finance trade data. Interest rate pricing is read from Montreal Exchange one-month CORRA futures settlements of November 13, 2026.
