Bank of Canada leaves key interest rate unchanged

The Bank of Canada left its overnight lending rate unchanged at 4.25 percent on Tuesday, a move widely expected by economists.

The central bank's overnight lending rate has remained at 4.25 percent since May, following nine consecutive hikes of a quarter of a percentage point.

Meanwhile, the bank trimmed its 2006 growth forecast to 2.8 percent from its earlier forecast of 3.2 percent. Its 2007 outlook was also reduced to 2.5 percent from 2.9 percent. The 2008 forecast remained unchanged at 2.8 percent.

This growth profile implies that the small amount of excess demand now in the economy will be eliminated by the second half of 2007, the bank said.

The overall rate of inflation is still expected to average about 1.5 percent through to the second quarter of 2007, before returning to the two percent and remaining there through the end of 2008, the bank added.

The bank's next decision on interest rates is due Dec. 5.

Source: Xinhua