RBC: Risks to the Fed's dual mandate have increased, likely to hold rates steady until 2026

Golden Ten Data reported on March 12 that the Royal Bank of Canada stated that the risks facing the Federal Reserve's dual mandate—achieving maximum employment and maintaining price stability—have both increased. However, the institution still expects the Federal Reserve to remain on hold until 2026. The institution said in its report: "We believe that the recent energy price shock is not sufficient to bring rate hikes onto the agenda, but it may prompt the Federal Reserve to adopt a wait-and-see approach." The longer the energy price shock persists, the greater the concern Royal Bank of Canada Capital Markets will have about downside risks to economic growth. "We believe the Federal Reserve will share the same view." Looking ahead to 2027, as inflation returns to target levels more sustainably, the Royal Bank of Canada expects three "normalization" rate cuts of 25 basis points each.