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RBC has revised its outlook for Canada’s economy, noting stronger-than-expected growth. With GDP projected to grow at 1.5% for Q4 2024, driven by robust consumer spending and housing recovery, the Bank of Canada (BoC) is likely to pause further rate cuts in March. However, risks like tariff hikes and weak business investment could impact long-term growth.

Recent inflation data also indicates strong consumer demand, with rising costs reflecting heightened consumption. Despite the acceleration in inflation, this trend signals economic strength, though it also poses risks if tariffs intensify.

Although the BoC is focused on near-term growth, RBC economists warn about the lack of business investment crucial for future productivity gains. They highlight that consumer credit is fueling current growth, which might lead to problems down the line if not addressed.

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