The annual headline inflation rate for October climbed to 2.0%, exceeding the 1.9% economists had predicted and up from September’s 1.6% reading. The increase was largely due to higher gas prices, property taxes, and base-year effects, which can distort year-over-year comparisons.

And while fluctuations in the headline reading aren’t unusual, the ‘core’ inflation measures that strip out more volatile items like food and energy prices also ticked up in the month.

As a result, bond markets reduced the odds of a follow-up 50-basis-point rate cut at the Bank’s December 11 policy meeting to 23%, down from nearly 40% before the inflation report.

“This heavy result should take some more steam out of the call for another 50-bps rate cut from the Bank of Canada in December,” wrote Douglas Porter, Chief Economist at BMO. “We have been in the 25-bps camp from the start and this report only reinforces that expectation, along with evidence that housing is stirring, the Fed will turn more cautious, and a limping loonie.”