Albertans voted to remain part of Canada in yesterday’s referendum, with an overwhelming majority rejecting a move to begin a separation process. According to preliminary results from several of Canada’s major broadcasters published in the last hour, roughly 76% of voters opposed a question that would launch a binding referendum on leaving the country, with 24% voting in favour. The result comes after decades of relative neglect from Ottawa, but also amid a drumbeat of sovereignty threats from Donald Trump and a westward policy tilt under Prime Minister Mark Carney, himself a former Albertan.

Foreign exchange markets are shrugging. There was no sign of a risk discount building in the Canadian dollar ahead of the vote, and the result came in almost exactly as polls had predicted.

Instead, a narrowing in cross-currency rate differentials is lending support after several Bank of Canada surveys showed price pressures building across the economy in August and early September. Consumer inflation expectations rose across all time horizons, with five-year views jumping to their highest since 2022. Among businesses, the move came “alongside the new tariffs and the recent rebound in energy prices”, with more than half expecting to pass cost increases on to customers in the coming months.

Earlier yesterday, Statistics Canada said the core inflation measures targeted by the Bank of Canada eased in September, with little to no evidence of energy price spillovers.

Traders in overnight index swap markets are placing 80% odds on a rate hike at next week’s policy meeting, suggesting that after hawkish messaging from Governor Tiff Macklem, markets think the central bank will tighten proactively – acting to prevent an unanchoring of price pressures before one shows up in measured inflation.

We are less confident: consumer demand remains weak, business investment is soft, and higher rates will do little to address the forces driving prices up. But to our knowledge, economists at all of Canada’s major banks now expect a move, making it likely that one is delivered.