The Bank of Canada on Tuesday maintained its key lending rate at 0.25 percent, saying it expects to keep it at this historical low until mid-2010.
''Conditional on the outlook for inflation, the target overnight rate can be expected to remain at its current level until the end of the second quarter of 2010,'' the central bank said in a statement.
Recent indicators, it said, point to a burgeoning global recovery from a ''deep, synchronous recession.''
Economic and financial developments have been ''somewhat more favorable than expected'' at its last meeting in July, the central bank said, ''although significant fragilities remain,'' it added.
In Canada, increased household wealth, improving financial conditions, higher commodity prices and stronger business and consumer confidence are contributing to a recovery.
However, ''heightened volatility and persistent strength'' in the Canadian dollar is slowing growth and curtailing exports, the central bank said.
''Growth is expected to be slightly higher in the second half of this year than previously projected but to average slightly lower over the balance of the projection period,'' it said.
The Canadian economy is now expected to grow by 3.0 percent in 2010 and 3.3 percent in 2011, after contracting by 2.4 percent this year.
Inflation is projected to climb back to the bank's 2.0 percent target in the third quarter of 2011, three months later than originally forecast.
