The predictions were correct. On Wednesday morning, the Bank of Canada announced that it would slash its policy rate by 50 basis points, twice as much as in the past three announcements.
The overnight rate is now 3.75 per cent, the bank deposit rate is 3.75 per cent, and the bank rate is 4 per cent.
The prediction was the Bank of Canada would move ahead on its biggest interest rate cut since it began lowering borrowing costs in June. Since then, it has cut the rate three times by 25 basis points.
The Bank was encouraged by September's inflation rate of 1.6 per cent.
"Inflation in shelter costs remains elevated but has begun to ease," said the Bank. "Excess supply elsewhere in the economy has reduced inflation in the prices of many goods and services. The drop in global oil prices has led to lower gasoline prices. These factors have all combined to bring inflation down."
1.6 per cent is lower than the bank's two per cent target.
"The Bank expects inflation to remain close to the target over the projection horizon, with the upward and downward pressures on inflation roughly balancing out," the Bank said. "The upward pressure from shelter and other services gradually diminishes, and downward pressure on inflation recedes as excess supply in the economy is absorbed."
The Canadian economy grew by two per cent in the first half of the year, and the Bank expects it to grow by 1.75 per cent in the second half. The labour market remains soft as population growth continues to outpace job creation.
Globally, the economy is expected to expand by three per cent over the next two years. Growth in the U.S. could outperform previous forecasts, while China's outlook remains subdued. In the European Union, growth has been soft but should recover modestly next year.
"If the economy evolves broadly in line with our latest forecast, we expect to reduce the policy rate further," the Bank said. "However, the timing and pace of further reductions -- will be guided by incoming information and our assessment of its implications for the inflation outlook. We will take decisions one meeting at a time."
The Bank makes its next policy rate announcement on December 11.