UPDATE 1-Bank of Canada upholds low rate pledge

* BoC deputy governor upholds low rates pledge

* No change to forecasts made in last quarterly report

* Says recession milder in Quebec than in rest of Canada
(Adds details)

OTTAWA, Feb 8 (BestGrowthStock) – The Bank of Canada upheld on
Monday its commitment to keep its benchmark interest rate
unchanged at a record low 0.25 percent until the end of June,
conditional on inflation staying on track.

“On 19 January, the bank reaffirmed its conditional
commitment to hold its policy rate at 1/4 percent until mid-
2010 in order to achieve its inflation target,” Deputy Governor
Pierre Duguay said, according to a slide presentation he was
giving in Levis, Quebec, and posted on the central bank’s

Duguay maintained the bank’s inflation and growth outlook
and repeated that the strong Canadian dollar and weak U.S.
demand would continue to act as “significant drags on economic

In a report released Jan. 21, the central bank painted a
slightly more upbeat outlook for the Canadian economy, raising
most of its quarterly forecasts for growth and inflation. At
the same time, it has warned that there is still considerable
excess supply in the economy and inflation will not return to
the bank’s 2 percent target until the third quarter of 2011.

Duguay’s comments followed a meeting of Group of Seven
finance ministers and central bank governors, who pledged to
withdraw their extraordinary stimulus very carefully to avoid
hampering the fragile recovery now under way.

The French-speaking province of Quebec, which has the
second biggest population in the country, suffered a milder
recession than the rest of Canada, Duguay said. Economic growth
in Quebec resumed in the third quarter of 2009 and likely
strengthened in the fourth quarter, he said.

Duguay attributed Quebec’s resilience to a provincial
infrastructure program announced in 2007, with projects ready
when the recession began; business restructuring done before
the crisis; lesser reliance on the automotive sector and more
stable housing prices.

Stock Research

(Reporting by Louise Egan; editing by Peter Galloway)

UPDATE 1-Bank of Canada upholds low rate pledge