Bank of Canada Governor Tiff Macklem says a larger interest rate cut may be needed to avoid allowing our economic activity to slip too low.
The central bank lowered its prime rate for the third consecutive time yesterday, to 4.25 per cent.
Inflationary pressures are easing, with a 2.5 per cent cost of living increase recorded in July.
But early figures show that economic activity in August is down even further.
If economic activity weakens further, Macklem says a bigger reduction in the prime rate may be needed to give the economy a boost.