Bank still putting faith in export-led recovery

We expect the Bank of Canada to hold its key interest rate 0.50% next week and remain neutral on the direction of its next potential move. While highlighting the further slide in oil prices as a greater downside risk to the economy, the Bank’s abiding faith in an export-led recovery seems unshaken. But if, as we expect, the fallout from the oil shock worsens while exports continue to misfire, then a third interest rate cut early next year, to only 0.25%, still seems likely.