Bank of Canada holds rate as it forecasts GDP decline of 7.8%

The Bank of Canada is holding its key interest rate.

The bank announced Wednesday it is keeping the rate at 0.25 per cent in response to the “extremely uncertain” economic outlook.

It says it plans to keep it there until the picture improves.

It is predicting the economy to contract by 7.8 per cent this year but warns the numbers could be thrown off if there is a severe second wave of COVID-19.

The central bank’s report pegs the annual inflation rate at 0.6 per cent this year, rising to 1.2 per cent next year and 1.7 per cent in 2022.