Oil price slump unlikely changes neutral rate outlook

As a large net oil exporter, the slump in the price of oil is a worrisome downside risk to Canada's economic outlook, which will be offset only partially by the sinking Canadian dollar. For the time being, we expect the Bank of Canada to stay neutral with respect to the interest rate outlook at next week's policy meeting. Unless oil prices rebound soon, however, then a rate cut later this year is no longer out of the question.