Canada's central bank left its benchmark target for the overnight unchanged at 0.50 percent, but said the "devastating" wildfires in the province of Alberta would cut about 1.25 percentage points of the country's second quarter economic growth due to the impact on oil production.
The Bank of Canada (BOC), which cut its rate twice last year by a total of 50 basis points, added that growth in the first quarter was in line with its forecast from April - although investment remains disappointing - and growth is expected to rebound in the third quarter as oil production resumes and reconstruction begins.
In April the BOC revised upwards its forecast for 2016 growth to 1.7 percent from a previous forecast of 1.4 percent. For 2017 it projected growth of 2.3 percent, down from 2.4 percent.
Inflation in Canada was also roughly in line with the central bank's expectation, with core inflation close to 2 percent due to the past influence of exchange rate depreciation and excess capacity.
Headline inflation rose to 1.7 percent in April from 1.3 percent in March while core inflation rose to 2.2 percent from 2.1 percent. The BOC targets inflation of 2.0 percent.
Canada's dollar, known as the loonie, started falling in sync with the 2014 decline in crude oil prices and lost 16.5 percent against the U.S. dollar last year.
But in mid-January this year the loonie started rebounding and was given further strength by the bottoming of oil prices. But since the start of this month it started to ease again and was quoted at 1.308 to the U.S. dollar today, up 5.9 percent this year.
"While the Canadian dollar has been fluctuating in response to shifting expectations of US monetary policy and higher oil prices, it is now close to the level assumed in April," the BOC said.
The Bank of Canada issued the following statement: