From Gas Prices to Policy Rates Bank of Canada Governor Tiff Macklem has acknowledged that no solution to the Middle East conflict is in sight, and that it is weighing on gasoline prices. The numbers
Energy security: the Middle East conflict weighs on gasoline, inflation and policy rates. Analysis of prices and flows in Europe.
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From Gas Prices to Policy Rates
Bank of Canada Governor Tiff Macklem has acknowledged that no solution to the Middle East conflict is in sight, and that it is weighing on gasoline prices. The numbers bear this out: Canadian inflation stood at 3.1% in September, well above the roughly 2% target. The policy rate, at 2.25%, has not moved across eight updates over 11 months. Yet several major financial institutions have now shifted to a hike scenario for the October 28 decision, following the U.S. Federal Reserve, which raised its own rate by 0.25 points in mid-September.
A Chain-Reaction Mechanism
The logic is simple. A prolonged conflict keeps fuel expensive and feeds inflation. The central bank then tightens credit to curb demand. A 25-basis-point hike would add about ? to every biweekly payment on a ?,000 variable-rate mortgage. And the worst may be yet to come: the latest data show that the fuel price surge has not yet passed through significantly to other sectors. The energy shock is thus moving from the gas pump to household budgets and the housing market.
Europe, a Multi-Speed System
Open data confirms this heterogeneity on the electricity side. On October 23, 2026, the day-ahead price stood at 23.07 in Finland and 33.90 in Denmark (DK-1 zone), but at 124.90 in the Czech Republic, 157.93 in Portugal and 227.27 in Switzerland — a gap of roughly one to ten between the two extremes.
On the gas side, physical flows on October 23 and 24 are zero at Mallnow (Yamal axis), at Waidhaus and at Baumgarten TAG. By contrast, Emden (Norpipe) recorded 432,030,972.9 in entry on October 23, and the TTF-THE-H virtual point 510,843,752. Observed volumes are therefore concentrated on northwestern axes.
The Limits of Interpretation
Caution is warranted. The file provides no direct data on flows from the Middle East, nor on gas or oil prices. The flow and price series have no unit specified, and no history allows us to determine whether the zero flows in the east are recent. The arrest in Poland of a suspect linked to an alleged assassination plot against Prime Minister Donald Tusk is a reminder of tension on NATO's eastern flank, but nothing establishes a link to energy supply.
What Can Reasonably Be Concluded
Energy security manifests first through the price channel, inflation and monetary policy, and European data show a highly uneven system across regions. The available elements demonstrate no supply disruption. The Canadian decision on October 28 will be a concrete test of that transmission.
This article was written with the assistance of artificial intelligence and verified by our editorial team.
This analysis was produced with the assistance of artificial intelligence, from institutional sources and verifiable open data. AI Transparency