United States: US Dollar supported by growth and labour momentum – RBC Economics

2.4% is RBC Economics’ upgraded average U.S. GDP growth forecast for 2026–2027. The firm reports sustained strength in economic and labour-market momentum, with unemployment projected to remain near historical lows at 4.2%. Core inflation and producer-price figures point to mounting pressures. These reinforce expectations of additional Fed tightening and a larger U.S. rate-hiking cycle than in Canada.

U.S. rate outlook supported by stronger data

"U.S. core-inflation pressures are building, while the labour market remains historically tight."

"Risks are balanced around our BoC forecast but tilted toward a larger U.S. hiking cycle, given stronger-than-expected U.S. growth, labour-market conditions and inflation pressures."

"U.S. growth and labour-market momentum continue. GDP forecasts have been revised higher again, averaging 2.4% in 2026 and 2027, up from previous forecasts of 2.1% and 2.2%, respectively. We continue to expect the unemployment rate to average near historical lows, at 4.2% in both 2026 and 2027."

"U.S. tariffs are having significant targeted impacts, but not enough to derail broader economic growth. The share of Canadian exports targeted by U.S. tariffs has increased following new measures imposed in August, but more than 80% of exports remain duty-free."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor. Know more.)