Economists are expecting a half point cut to interest rates at next week’s Bank of Canada meeting. The central bank’s decision on rates is due 09:00 ET on Tuesday.

“The central bank will unveil the next step in interest rate relief, cutting rates by half a point. Expect Governor Dodge to leave the door wide open for further measures as needed, while avoiding saying anything too gloomy about the medium-term outlook,” says CIBC World Markets.

“This is his last chance to give his message ahead of the December federal budget, and the game plan is to leave the impression that rate cuts, not a turn back to deficits, will be the cure for the current economic malaise.”

BMO Nesbitt Burns notes that market watchers are almost unanimous that the Bank of Canada will cut rates by 50 bps, “However, after the Bank stunned the consensus last month with an aggressive 75 bp move, all possibilities must be seriously considered. Another 75 bp cut would bring overnight rates in Canada to 2%, in line with the Fed funds rate. The Bank will probably not take this bold step, since the sickly Canadian dollar is already providing plenty of stimulus.” It says a 25 bps cut is possible too, if not likely.

Also on Tuesday, consumer confidence numbers are due to be released in the United States. The Federal Reserve’s Beige Book is released on Wednesday, followed by durable goods orders on Thursday.

BMO Nesbitt Burns says, “A partial rebound in durable goods orders is quite likely in October. Part of the huge 8.5% decline in September was probably artificially due to the uncertainties and bottlenecks created by the event itself.” CIBC agrees, noting, “Durable goods orders should see a rebound from a devastating September, but remain very weak on a year-over-year basis.”

On Friday, third quarter GDP numbers are out on both sides of the border. Regarding the U.S. numbers, CIBC says, “Remember that surprisingly small drop in Q3 GDP? It will likely be revised away to the more than 1% decline that economists originally expected.” The Canadian numbers will likely confirm that the economy has slid into recession, it says.

BMO says that the U.S. revisions may not affect the outlook for Q4 GDP, “and thus may not prove market-moving”. It also sees a decline in Canadian GDP for the first time since the start of 1992. “We look for GDP to fall at a 1% annual rate, with a sharp drop in exports, auto sales, and inventories accounting for most of the weakness. The impact of the severe drought across much of the country will aggravate the downdraft, carving into farm inventories.”

The earnings slate is quiet next week, with CIBC leading off on Monday, along with Alliance Atlantis Communications and Hudson’s Bay Co.

Bank of Montreal announces on Tuesday, and Forzani Group Ltd. on Friday.