This study provides a normative theory for how Bayesian causal inference can be implemented in neural circuits. In both cognitive processes such as causal reasoning and perceptual inference such as cue integration, the nervous systems need to choose different models representing the underlying causal structures when making inferences on external stimuli. In multisensory processing, for example, the nervous system has to choose whether to integrate or segregate inputs from different sensory modalities to infer the sensory stimuli, based on whether the inputs are from the same or different sources. Making this choice is a model selection problem requiring the computation of Bayes factor, the ratio of likelihoods between the integration and the segregation models. In this paper, we consider the causal inference in multisensory processing and propose a novel generative model based on neural population code that takes into account both stimulus feature and stimulus reliability in the inference. In the case of circular variables such as heading direction, our normative theory yields an analytical solution for computing the Bayes factor, with a clear geometric interpretation, which can be implemented by simple additive mechanisms with neural population code. Numerical simulation shows that the tunings of the neurons computing Bayes factor are consistent with the "opposite neurons" discovered in dorsal medial superior temporal (MSTd) and the ventral intraparietal (VIP) areas for visual-vestibular processing. This study illuminates a potential neural mechanism for causal inference in the brain.