The Bank of Canada cut its growth forecast on Wednesday, citing a looming slowdown in housing and a weaker outlook for exports, but said fiscal stimulus, accommodative monetary policy and a strengthening U.S. economy should help in the months ahead.
The central bank lowered its forecast for GDP growth to 1.1% in 2016 and 2% in 2017, down from 1.3% and 2.2% forecast three months ago, citing slower near-term housing resale activity and a lower trajectory for exports.
Moreover, the bank said Ottawa's recent move to tighten mortgage and tax rules around housing was likely to restrain residential investment, dampen household vulnerabilities and leave real GDP 0.3% lower at the end of 2018.
As expected, the bank held its overnight rate at 0.5%, where it has been since July 2015, even as it trimmed gross domestic product forecasts for Canada, saying downward pressure on inflation will continue while economic slack persists.
