While Canada’s central bank now feels the economy will grow at a slightly lower pace this year than previously thought, it seeks the risks from COVID-19 diminishing, but not enough to change its key interest rate target of 0.25%.

Bank of Canada Governor Tiff Macklem says the recovery will still be strong, just uneven.

”The reopening of the economy and the strong progress of vaccinations has given us reason to be more optimistic about the direction of the economy, but we’re not there yet,” points out Macklem.

”And we’re mindful the process is likely to be bumpy and some scars will remain.”

The central bank expects the economy to grow 6% this year, down from its previous forecast of 6.5%.

However, it’s now anticipating growth of 4.6% next year, up from its earlier forecast of 3.7%.

The bank also believes the recent spike in inflation will be temporary, lasting only through the end of this year.