Bank of Canada Governor Tiff Macklem assured Canadian households and businesses that borrowing rates will remain at historic lows for the foreseeable future.

“Our message to Canadians is that interest rates are very low and they’re going to be there for a long time,” Macklem said at a press conference Wednesday.

His comments came after the central bank announced it is holding its key interest rate at 0.25 per cent in response to what it calls an “extremely uncertain” economic outlook due to the COVID-19 pandemic.

“If you’ve got a mortgage of if you’re considering making a major purchase, or you’re a business and you’re considering making an investment, you can be confident rates will be low for a long time,” Macklem said.

The Bank of Canada’s July Monetary Policy Report (MPR) said growth will pick up beginning in this quarter, the third of the year, with the country recouping about 40 per cent of the drop in output from the first half of 2020.

Much of that will be driven by the reopening of businesses and partial rebound in spending, the bank said.

But after an initial, quick bounceback, Canada will enter what the bank calls a "recuperation phase" where the pace of recovery will slow.

"As reopening progresses, many people will probably continue to fear contracting the virus, and uncertainty about job security is likely to persist," the report said.

"Both consumer and business confidence are therefore expected to remain subdued, restraining spending and employment, particularly in activities that involve in-person interaction."

—With files from The Canadian Press