Bank of Canada: Economy will shrink due to Alberta wildfires

Canada's central bank said Wednesday the Canadian economy will shrink in the second quarter because of Alberta's devastating wildfires, which shut down its oil sands production.

The Bank of Canada, which kept its key interest rate on hold, said its preliminary assessment is that the destruction and halt to oil production will knock about 1 1/4 percentage points off real GDP growth in the second quarter. In April, the bank had forecast 1 percent growth in the quarter.

The bank expects the economy to rebound in the third quarter as oil production resumes and the rebuilding starts.

Officials hope to start a phased in return of more than 80,000 evacuees to the main oil...