(Adds comment from bank, exports and inflation prospects)
By Andrea Hopkins and Leah Schnurr
OTTAWA, Sept 7 (Reuters) - The Bank of Canada held interest rates steady on Wednesday, citing weaker-than-expected global growth but forecasting the country's economy would bounce back this year.
As expected, the bank held its overnight rate at 0.5 percent, where it has been since July 2015.
The central bank projected a "substantial rebound" in economic growth in the second half of the year, boosted by the Alberta wildfire recovery and federal stimulus spending.
It said that the U.S. economy was weaker than expected in the second quarter, with a contraction in business and residential investment. While a healthy labor market and solid consumption should support growth in the rest of the year, the outlook for business investment "has become less certain."
The bank also said while there are preliminary signs of a possible moderation in Vancouver's hot housing market, financial vulnerabilities associated with household imbalances remain elevated and continue to rise.
In recent months, Canada's monetary policymakers have overestimated economic growth and have trimmed projections several times even as they hold interest rates steady, reluctant to use up what little leeway remains to lower borrowing costs and stimulate spending.
"While the strength in exports during July was encouraging, the ground lost over previous months raises the possibility that the profile for economic activity will be somewhat lower than anticipated in July," the bank said in a statement.
It said risks to the profile for inflation have tilted "somewhat to the downside" since its last statement in July, but the overall balance of risks remains within the zone for which the current stance of monetary policy is appropriate.
The bank once again looked to Prime Minister Justin Trudeau's Liberal government to help boost the economy in the months ahead, saying that growth in the fourth quarter is projected to remain above potential as federal infrastructure spending starts to have more impact.