Export rebound won't prompt a shift in neutral stance

We expect the Bank of Canada to retain its neutral interest rate bias in next week's policy statement. Although exports have rebounded surprisingly well, the Bank's Governor doesn't seem convinced that a lasting export revival is underway, not least because of the recent underperformance of the labour market. Meanwhile, the temporary effects of higher energy prices and exchange rate pass-through are beginning to fade, suggesting that core inflation may fall further below the inflation target.