Bank of Canada likely to cut rates again

As we expected, the Bank of Canada lowered its key policy rate from 0.75% to 0.50% today, admitting that the economy fell into a mild recession in the first half of the year. We have been warning that the oil downturn would hit the economy harder than the Bank originally thought for some time. It still appears to be too optimistic about the prospects for a rebound in the second half and, as a result, we suspect it will be forced to cut rates again to 0.25% later this year.