Bank of Canada’s Macklem: Elevated Fuel Margins Risk More Persistent Inflation

Macklem is framing fuel margins as a structural drag on disinflation rather than a transient shock, which matters because it shifts the policy debate from when to cut toward whether the current rate is restrictive enough. That reframing affects rate-sensitive sectors and anyone pricing off the front end of the curve. The open question is whether margin normalisation happens on its own or becomes the trigger for another hike.