Outside gasoline, “oil prices must remain elevated for months rather than days or weeks to cascade through supply chains and influence business pricing decisions,” RBC said – a key reason they expect only a modest, delayed inflation bump.
Their scenario work showed that if West Texas Intermediate held at about US$100 per barrel, headline CPI could peak “around 3% in Canada, and 3.5% in the U.S. this year,” roughly three‑quarters of a percentage point above RBC’s pre‑conflict Canadian forecast.
Why a higher oil bill may not move BoC
History also matters. The Bank of Canada cut rates by 50 basis points in 2015 when collapsing prices reflected a structural surge in US shale output. Today’s shock, by contrast, came from supply disruptions that markets still see as temporary – and from a North American energy system in which US production has climbed from 5.4 million barrels a day in 2004 to about 13.5 million in 2025, sharply reducing vulnerability to oil spikes.
Earlier this month, deputy governor Sharon Kozicki underlined that the Bank’s response to supply shocks “depend crucially on their size and duration,” with short‑lived moves typically inviting a “look‑through” approach.
RBC Economics echoes that stance, reiterating its call that the overnight rate – already at 2.25% after a long tightening‑then‑easing cycle – would likely stay there through the end of 2026.