The Bank of Canada cut its growth forecast on Wednesday in a signal that interest rates will remain at historically low levels for some time.

Growth in Canada will expand by 1.5 per cent in 2013, down from January's estimate of 2 per cent, the Bank of Canada said as it held its key overnight rate at 1 per cent where it has sat since September 2010. The cut in outlook comes as the International Monetary Fund this week reduced its growth forecast for the Canadian economy.

"With continued slack in the Canadian economy, the muted outlook for inflation, and the constructive evolution of imbalances in the household sector, the considerable monetary policy stimulus currently in place will likely remain appropriate for a period of time, after which some modest withdrawal will likely be required, consistent with achieving the 2 per cent inflation target," the central bank said in a statement.

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