The December 2025 Monthly Forecast Update from RBC Economics includes a forward-looking analysis of Canadian, US and international financial market trends.
Highlights
- The Bank of Canada is unlikely to cut the overnight rate further. The next move is more likely to be a hike, although that isn’t expected until 2027.
- Canada’s GDP growth for 2025 is tracking above prior expectations, and the unemployment rate below.
- The cautiously optimistic outlook for Canada’s economy remains intact.
- US forecasts are in a holding pattern, pending delayed data releases. “Stagflation lite” remains a key theme, with the unemployment rate and core inflation expected to edge higher in 2026.
“No single data point should change our view of the economy. But consecutive upside employment surprises in Canada, along with a substantial 0.6 percentage point drop in the unemployment rate between September and November, added conviction to our cautiously optimistic outlook on the Canadian economy.”
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