BoC considered lowering rate by quarter point, but felt economy warranted a jumbo cut

The Bank of Canada considered cutting its key interest rate by just a quarter of a percentage point last month, but opted to take a larger step in the face of a weakening economy and falling inflation.

That’s according to the central bank’s summary of deliberations released Tuesday, which details the governing council’s conversations ahead of the Oct. 23 interest rate announcement.

The Bank of Canada ultimately opted for a half-percentage-point cut, bringing its policy rate to 3.75 per cent.

The summary says some governing council members were concerned a half-point cut could be interpreted as a sign of economic trouble and therefore stir up expectations for more outsized interest rate reductions.

But the summary says the governing council continued to expect the economy to grow and inflation to remain close to the two per cent target.

It also reiterates that the Bank of Canada plans to take interest rate decisions one at a time based on how the economy and inflation evolve.