07:10 AM EST, 01/22/2025 (MT Newswires) -- RBC said its forecast for the Bank of Canada remains unchanged expecting policymakers to cut rates in 25bps increments at every meeting until July.

Inflation has perked up slightly, but not enough to put the BoC on hold given the material amount of slack in product and labor markets, noted the bank.

Recent BoC survey results were mostly neutral with modest growth expectations and slowing wage growth coupled with weak hiring demand. Downside risks to the Canadian dollar (CAD or loonie) shouldn't deter Canada's central bank from cutting, stated RBC.

The second half of 2024 saw front-end bond yields choppily move lower, added the bank. RBC expects macro and policy to continue to bring short-end bond yields lower and curves steeper.

With upward revisions made to the United States Treasury yield forecast, the bank estimates even more Government of Canada outperformance throughout 2025.

Risks to RBC's yield forecasts would be the BoC cutting less than it anticipates and realizing a higher terminal than the bank's forecasted 2%.