The S&P/TSX Composite Index slipped 0.7% to close at 35,929 on Monday, as investors digested the latest inflation figures and reassessed the outlook for Bank of Canada (BoC) policy. Canada’s annual inflation rate accelerated to 3.1% in September, a four-month high, driven largely by higher gasoline prices. While the reading undershot market expectations of 3.2%, it did little to ease concern about the broader inflation trajectory, with policymakers continuing to highlight upside risks to prices.
BoC Governor Tiff Macklem said on Saturday that the central bank plans to substantially raise its quarterly inflation forecast this month, reinforcing the hawkish tone he struck last week on energy-related price pressures. Oil prices stayed elevated amid attacks on tankers in the Strait of Hormuz, keeping inflation risks front and center for markets.
Financials weighed on the index, with major banks broadly weaker: Royal Bank of Canada fell 0.9%, while Bank of Montreal, Canadian Imperial Bank of Commerce, and National Bank of Canada each lost 0.8%. Mining shares also declined as gold prices retreated.