Bank of Canada would be justified cutting rates by half a point. Heres why – National [Video]

After proceeding at a tentative, 25-basis-point cut pace in the first three interest rate cuts of its cycle, many economists expect the Bank of Canada will take an oversized step lower in its upcoming decision on Wednesday.

The central bank’s policy rate stands at 4.25 per cent following the most recent quarter-point cut in early September.

But a lot’s changed in Canada’s economy since that time.

For one, inflation’s looking to be well-tamed, dropping from a bull’s eye on the Bank of Canada’s two per cent target to 1.6 per cent in the latest reading.

Tiff Macklem, governor of the central bank, has made clear in recent speeches that the Bank of Canada is equally concerned about inflation dropping too low below two per cent as it is about price pressures holding too high.

While Macklem had previously warned there could be “bumps” on the path back to the price stability target, inflation has come under control faster …