RBC Economics expects December rate increases in the United States and Canada, while judging the U.S. case more forceful as output and payroll readings have exceeded its expectations.
RBC forecasts 50 basis points of additional Federal Reserve tightening in the current cycle, including a December increase, and expects the Bank of Canada to lift rates that month as well. The bank sees a greater chance of a larger U.S. hiking cycle than its baseline implies. RBC describes recent Canadian GDP and labor indicators as softer. These are the bank’s projections, not announced central-bank policy.
The Bureau of Economic Analysis (BEA) put real U.S. GDP growth at a 3.4% annual rate in the third quarter of 2026, according to its advance estimate. That compares with 2.2% in the second quarter. The Bureau of Labor Statistics (BLS) reported that nonfarm payrolls rose by 165,000 in October, with unemployment at 4.1%.
Inflation readings point in different directions. The consumer price index (CPI) rose 0.4% in October, while the index excluding food and energy increased 0.3%, matching its monthly gains in August and September. The BEA’s core personal consumption expenditures (PCE) price index rose at a 2.5% annual rate in the third quarter, down from 3.3% in the previous quarter. The BLS could not publish October 2026 12-month changes for many CPI series because it had not collected October 2025 survey data during a lapse in appropriations.
A later data release added a producer-price reading. FXStreet’s page carrying RBC’s outlook was timestamped at 2:56 a.m. ET on Nov. 13, before the BLS’s scheduled 8:30 a.m. ET release of October producer prices. In that release, the BLS said final-demand prices rose 0.3% in October after a revised 1.4% increase in September. Its measure excluding food, energy and trade services gained 0.5% for the month and was 4.9% higher than a year earlier.
The Fed held its target range at 3.75% to 4.00% on Oct. 28; two committee members favored a quarter-point increase. On Oct. 28, the Bank of Canada lifted its overnight-rate target to 2.5%, a 25-basis-point increase. Statistics Canada reported that unemployment stood at 6.7% in October, up 0.2 percentage points from September.
The Fed’s next meeting is scheduled for Dec. 8-9. The Bank of Canada is due to announce its next rate decision Dec. 9 at 9:45 a.m. ET.
