Bank of Canada cuts growth forecast during a ‘climate of heightened uncertainty’

Reuters/Eric Miller

The Bank of Canada's left its key rate unchanged at 0.5%, as expected.

Rates have been kept on hold since July 2015, when it cut by 25 basis points.

In their latest monetary policy report, the bank revised down their forecast for GDP growth.

For 2016, the bank now expects growth to clock in at 1.3%, down from 1.7.%, and for 2017 they expect growth of 2.2%, down from 2.3%.

"Downward revisions to investment and exports more than offset the positive economic effects of the recent increase in oil prices," the report noted.

The bank also noted that it thinks inflation is on track to get back to 2% in 2017 "as the complex adjustment underway in Canada’s economy proceeds."

Reuters/Eric Miller

Notably, last week Canada's June jobs report showed that the Canadian labor market lost 700 jobs, with full-time work falling by 40,100 and 39,400 part-time jobs being created.

Moreover, as Dwyer noted, the participation rate has fallen to 65.5% — the lowest level since 1999.

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