The Globe and Mail reports in its Tuesday edition that financial markets have begun betting on a rate hike from the Bank of Canada next week, putting more weight on hawkish remarks by Governor Tiff Macklem than September's inflation data. The Globe's Mark Rendell writes that on Monday, Statistics Canada reported inflation ticked up to 3.1 per cent in September from 3 per cent the month before, driven by a 6.1-per-cent increase in gasoline prices. Bond traders, however, were paying closer attention to comments that Mr. Macklem made over the weekend suggesting that high oil prices are becoming a major concern for the bank. This hawkish view was reinforced on Monday by a pair of central-bank surveys showing an uptick in inflation expectations, particularly among Canadian consumers. Interest-rate swap markets indicate an 80-per-cent chance of a quarter-point rate increase at the bank's Oct. 28 decision. "We continue to see fragile economic recovery as the biggest counterweight to heightened inflation risks, and expect caution from the BoC, especially when rising bond yields are already tightening financial conditions and raising borrowing costs for businesses and households," RBC senior economist Claire Fan said in a note. </P> </BODY>