The Bank of Canada is keeping its key interest rate target on hold as it raises its outlook for economic growth this year.

The key rate remains at 0.25 per cent where it has held steady for more than a year.

The decision came as the Bank of Canada raised its prediction for economic growth this year to 6.5 per cent, up from an earlier forecast of 4.0 per cent.

Economic growth is expected to moderate after that, according to the central bank鈥檚 quarterly outlook report.

The improving conditions are why the bank also says today it will ease off federal government bond purchases which are part of its quantitative-easing program designed to aid the economy.

The Bank of Canada says it plans to keep its up its efforts to aid the economy until slack is absorbed and inflation is back at its two-per-cent target, which the bank now sees happening later next year.

The Canadian Press

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