Canada’s central bank surprised the market with a weaker-than-expected rate hike. Bank of Canada (BoC) raised the overnight rate 50 basis points (bps), hitting 3.75% — the highest in over a decade. It was double the typical pace, but the increase was still smaller than the market had priced. The central bank confirmed the market’s  suspicion — the economy is weakening.

The BoC aggressively cut its forecast for economic growth. Real gross domestic product (GDP) growth fell to 0.9% points for next year, about half the previous forecast. The BoC also came close to saying they expected a recession, but just fell short. It’s a precarious situation at best.

“This suggests that a couple of quarters with growth slightly below zero is just as likely as a couple of quarters with small positive growth.” read the accompanying release.