All year, the country’s most influential economists have accused the Bank of Canada of being Pollyannaish about the country’s economic prospects, and today the Bank agreed.

In delivering its expected 25 basis-point rate cut today, the Bank also admitted that the situation looks darker than it had been forecasting. BMO Nesbitt Burns Inc. calls the Bank’s policy statement startlingly gentle, admitting that the economy is still weakening. It notes that the market is already looking for further cuts in response to the Bank’s statement.

“A recent wave of soft domestic economic data has fired up talk that the Bank is falling behind the curve, and will be forced to crank up the pace of easing over the fall. Today’s press release in fact nodded in that general direction, admitting that growth has been slower than expected since the rate cut in mid July,” says BMO. The Bank now expects growth to be “below potential” in Q3 and Q4, due to weakness in the U.S., and added drag from overseas.

“The Bank of Canada has finally recognized that the outlook for the Canadian economy is still fraught with downside risks–a sea-change from the optimistic view that was laid out in the Update to its semi-annual Monetary Policy Report released only four weeks ago,” observes TD Bank economists.

In addition to the effects of other economies, the Bank also pointed to wavering domestic demand and bloated inventory levels as additional sources of concern. CIBC world Markets notes, “we’ve been warning of an erosion in domestic demand for some time, with the latest economic reports (including consecutive employment declines and soft retailing results) suggesting that a heretofore resilient consumer is beginning to tire.”

“In sum, with this morning’s statement, the Bank of Canada has left little doubt that it is standing ready to pull the interest-rate trigger as often and as forcefully as necessary to keep Canada’s economy alive,” says TD. CIBC suggests that, “given uncertainty in the global economic outlook, and the new question marks surrounding domestic economic strength, the Bank is very clearly poised to administer additional rate relief. We continue to expect a further 75 bps of easing, taking Canada’s overnight target to 3.25% by early next year.”