Economic growth forecast lowered to 2% for 2013 as lending rate held at 1%

Published on Jan 23, 2013, by CBC News

The Bank of Canada lowered its growth forecast for 2013 today, keeping its benchmark interest rate steady at one per cent for the 19th consecutive time.

The bank also lowered expectations for how much it thinks the economy will expand in 2013 to two per cent. In October, it had estimated 2.3 per cent growth in gross domestic product for the year.

"The slowdown in the second half of 2012 was more pronounced than the Bank had anticipated," the bank said in a statement posted on its website today.

The bank ended its policy announcement by saying: "Some modest withdrawal of monetary policy stimulus will likely be required over time … [but] the timing of any such withdrawal is less imminent than previously anticipated."

In layman's terms, that's the bank's way of saying it is less likely to raise rates than it used to be.

The value of the Canadian dollar in U.S. currency fell 0.7 per cent to $1.0012 US in late morning trading.

The central bank's benchmark rate has been at one per cent for more than two years.

Bank of Canada governor Mark Carney was scheduled to comment later Wednesday on the bank's decision to hold interest rates steady.