Key interest rate stays at 0.5%

The Bank of Canada is keeping its key interest rate steady at 0.5%. The rate is a key factor used by Canada’s big banks in determing their prime lending rate, which is used for variable rate mortgages and lines of credit.

The central bank said growth in the first quarter was steady, but that the second quarter will be weaker than predicted due to the Alberta wildfires.

The bank had predicted growth of 1.0 per cent for the second quarter in its April monetary policy report.

The Bank of Canada said inflation is roughly in line with its expectations, with total inflation slightly below its 2% target and core inflation close to 2%.

The central bank also noted that the housing market continues to show strong regional differences, reinforced by adjustments ongoing in the economy.