The Bank of Canada announced it's holding its key interest rate at 0.25% in response to what it calls an "extremely uncertain" economic outlook as a result of the COVID-19 pandemic. The Bank also announced it plans on keeping the key interest rate at this level until its inflation objective is achieved.

The Bank did note in its latest update, which was released Wednesday, that the economy is starting to picking up considerably as restrictions are eased.

“This return to growth reflects the relaxation of necessary containment measures put in place to slow the spread of the coronavirus, combined with extraordinary fiscal and monetary policy support,” a Bank of Canada release says.

READ: Bank of Canada Says Impact of COVID on Economy Has “Peaked”

The Bank said it expects the Canadian economy to contract by 7.8% this year but then rebound by 5.1% in 2021 and 3.7% in 2022. However, the Bank said it does not expect the economy to reach its pre-COVID-19 level until 2022.

However, the Bank did caution that the numbers could be thrown off if there is a second wave of the virus.

“As the economy moves from reopening to recuperation, it will continue to require extraordinary monetary policy support,” the Bank’s statement says. “The Governing Council will hold the policy interest rate at the effective lower bound until economic slack is absorbed so that the 2 percent inflation target is sustainably achieved.”

James Laird, the co-founder of and President of CanWise Financial mortgage brokerage, says the Bank seems "optimistic" that the worse of the virus is behind us and that Canada and the world have started along the path to recovery and is expecting the economy to rebound in the second half of 2020 and throughout 2021.

"This announcement should give Canadians confidence that both fixed and variable rates will remain near their current historic lows until the economy is back to pre-pandemic levels," said Laird. "As the real estate market continues to rebound competitive pressure between mortgage lenders is causing both fixed and variable rates to inch down on a continuous basis."