Bank of Canada leaves key interest rate at 0.5% and lowers economic growth forecasts for 2016 and 2017

The Bank of Canada held its benchmark interest rate on hold but lowered its estimates for Canadian growth in 2016 and 2017 during the October policy meeting on Wednesday. The Central bank cut its 2016 GDP forecast to 1.1%, down from the 1.3% forecast posted three months ago, while the 2017 GDP forecast was revised down to 2.0% from 2.2% projected earlier. As analysts expected, the Bank kept its overnight rate at 0.5%. The key rate remained unchanged since July 2015, and analysts say it is unlikely to be raised until 2018. According to the latest projections, the Bank of Canada expects the economy to fully rebound in the middle of 2018. Moreover, the Bank said the Canadian government's recently announced changes to mortgage and tax regulations in the country's housing market are likely to restrain residential investment and dampen household vulnerabilities, lowering the 2018 real GDP level by 0.3%. In the past, the Canadian real estate market helped to offset low oil prices and boost economic growth. The Central bank also said that even though Canada's exports are increasing, such growth in exports is not enough to make up for ground lost during the first half of 2016. The Bank of Canada also expects consumer inflation to be close to its 2% target level in early 2017.