The August 2025 Monthly Forecast Update from RBC Economics includes a forward-looking analysis of Canadian, US and international financial market trends.
Highlights
“Softening in the US economy should also suggest current tariffs are too severe to be sustained, with little offsetting benefits. Tariffs thus far have failed to accomplish the main goals they were set to achieve.”
—RBC Monthly Forecast Update
- Another month of trade-related news didn’t move the needle on the Canadian and US economic forecasts. The blanket US tariff on Canada was raised from 25% to 35% but continues to impact only a small share of exports.
- Real GDP growth in Canada and the United States is expected to soften in the second half of 2025.
- The Bank of Canada’s policy rate remains in an appropriate position, driven largely by the slack in Canada’s labour market and rising fiscal support.
- The Federal Reserve is expected to make its first rate cut in December.
- Labour market conditions are bottoming out in Canada—but will continue to worsen in the United States.
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