Facing a larger than previously expected fallout from the oil price shock and a still misfiring manufacturing sector, there is a very strong chance that the Bank of Canada will cut rates from 0.75% to 0.50% at next week's policy meeting. An additional cut to 0.25% later this year is also likely. It is hard to see how the Bank could not cut rates when the economy is in recession, leaving the Bank's previous forecast that GDP growth would be as high as 1.9% this year in tatters.
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