Although the Bank of Canada (BoC) was widely expected to lower its forecasts for economic growth this month, it still managed to take the markets by surprise by abandoning its tightening bias. Last year, under former Governor Mark Carney, the BoC stood apart from many of its developed-world peers by adopting a hawkish stance toward future rate hikes.

But the language in subsequent rate announcements regarding the potential for future rate hikes has been watered down over time, and now it’s finally gone. Of course, central bankers are known for employing deliberately abstruse language, so in reading through the announcement, a normal person could practically blink and miss this consequential shift.

In past announcements, the key language that pointed toward the BoC’s former hawkish stance read like this: “Over time, as the normalization of these conditions unfolds, a gradual normalization of policy interest rates can also be expected …” Translation: The bank was cautiously optimistic about the Canadian economy’s prospects for improvement, and as growth materialized, it could begin raising rates again.

But in the latest statement, which was released on Wednesday, that language had disappeared, and in its place was the following: “Although the Bank considers the risks around its projected inflation path to be balanced, the fact that inflation has been persistently below target means that downside risks to inflation assume increasing importance.”

In other words, the bank is now considering the possibility of a further weakening in the economy, and the corresponding need to keep rates at historically low levels for now, while a rate cut could be a possibility if the situation worsens.

Naturally, inflation is one of the BoC’s primary considerations when setting monetary policy. The bank targets an inflation rate based on the consumer price index (CPI) of 2 percent over the medium term, a period which it defines as six to eight quarters.

While inflation currently remains within the bank’s targeted range of 1 percent to 3 percent, according to the latest data from Statistics Canada, the CPI is hovering just above that lower threshold. In September, the CPI rose 1.1 percent year over year, which is the same rate as the prior month. That’s up from a one-year low of 0.4 percent, but well below the five-year average of 1.5 percent growth, which is already fairly muted inflation.

The central bank’s overnight rate has stood at 1 percent now for over three years, and the Canadian economy has yet to show signs of transitioning to the strong export growth and corresponding rise in business investment envisioned by current Governor Stephen Poloz. Indeed, in its latest decision to hold rates steady, the BoC acknowledged that the composition of growth of the global economy is now less favorable for Canada, particularly softer-than-expected growth from the US, which is the country’s largest trading partner.

As such, the BoC lowered its forecasts for the Canadian economy, which it had last issued in mid-July and now essentially mirror the projections of private-sector economists. The central bank expects full-year 2013 growth of 1.6 percent (down from its prior forecast of 1.8 percent), 2.3 percent growth in 2014, and 2.6 percent growth in 2015. The BoC had previously forecast that the economy would grow by 2.7 percent in both 2014 and 2015.

Despite these changes, 2015 is still the year in which the Canadian economy is expected to finally be growing at a level that achieves full production capacity. As Deputy Governor Tiff Macklem noted in a recent speech, gross domestic product (GDP) must grow at a minimum rate of 2.5 percent annualized to relieve the economy of its considerable slack.

As a result, economists expect the BoC’s benchmark overnight rate will remain at 1 percent for at least another eight months. The Wall Street Journal says of the 12 institutional economists whose outlooks it reviewed, roughly half don’t expect rate hikes of 25 basis points to 50 basis points until the second half of next year.

The BoC’s sudden dovishness should also keep the Canadian dollar in the downtrend that began late last year, with the currency finally falling below parity with the US dollar in mid-February. The loonie currently trades just below USD0.96, down about 5.9 percent from its trailing-year high. While that weakness is disappointing from the standpoint of US investors who have enjoyed having their gains inflated by a strong currency, it should ultimately be helpful for strengthening the competitiveness of the country’s exports in the global market.

But the one area of the economy that could cause the bank to adjust interest rates sooner is the real estate sector. In its statement the bank noted that it’s monitoring household debt levels, which remain near an all-time high, as well as rising real estate prices, both fueled by historically low borrowing costs.

Canada’s Finance Minister Jim Flaherty has previously tweaked mortgage-lending rules four times to rein in the real estate market, with eventual rate hikes from the BoC expected to complement these efforts. But the latter have now been deferred. The average sales price of a Canadian home is presently almost CAD386,000, up 8.8 percent from a year ago.

By contrast, the average sales price of an existing home in the US was USD247,400 in September, according to the National Association of Realtors. And the US Census Bureau reports the average sales price of a new single-family home is nearly USD319,000.

Even when considering the Canadian banking system’s strong reputation for financial prudence, it does make one wonder how a nation of just 35 million people can support prices at that level in the midst of a sluggish economy. At the same time, the housing sector’s relative strength has helped bolster the economy, so any actions to curb its growth could weaken the economy further until another segment of the economy shows evidence of greater strength.

Although this news is far from upbeat, the important takeaway is that 2015 is still a key year for the Canadian economy, which we knew already, while 2013 likely marks the trough of economic growth. Fortunately, the BoC has given itself the policy flexibility to help ensure that remains the case.