The May 2025 edition of Financial Markets Monthly from RBC Economics includes a forward-looking analysis of Canadian, US and international financial market trends.
Highlights
“The outlook remains nearly entirely contingent on US trade policy, which is highly unpredictable, but expect less downside risks to our base case compared to a month ago.”
—RBC Financial Markets Monthly
- Earlier-than-expected US trade agreements with China and the UK are trimming downside economic growth risks, but the average US tariff rate (at more than 13%) is the highest since the 1930s.
- The outlook for Canada has changed little from a month ago, but risks are tilting less to the downside as exporters face the lowest US tariffs globally.
- The Bank of Canada’s interest rate cuts last year are supporting growth with a lag, and additional fiscal stimulus could be in the pipeline.
- Less demand for US assets and dollar could exacerbate trade shock pain.
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