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Despite higher inflation, Bank of Canada leaves rates untouched

Bank of Canada Governor Stephen Poloz held Canada's benchmark interest rate steady on Wednesday, March 1, 2016, citing "significant uncertainties" facing the Canadian economy. .
Bank of Canada Governor Stephen Poloz held Canada's benchmark interest rate steady on Wednesday, March 1, 2016, citing "significant uncertainties" facing the Canadian economy. . Adrian Wyld/CP

The Bank of Canada held interest rates steady on Wednesday as it stayed focused on the “significant uncertainties” facing the economy, even while acknowledging fourth-quarter growth may have been stronger than anticipated.

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In an unusually short statement, the central bank said it was looking past the temporary impact of higher energy prices that drove inflation above its 2 percent target in January, noting that muted underlying inflation continued to point to material excess capacity.

READ MORE: Gas prices are up but consumers are paying less for food, January inflation rate shows

The bank said it was continuing to monitor the risks contained in its January Monetary Policy Report (MPR), which included the lack of clarity over what policies new U.S. President Donald Trump will enact.

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The bank kept the benchmark interest rate at 0.50 percent, as was widely expected, saying it “remains attentive to the impact of significant uncertainties weighing on the outlook and continues to monitor risks outlined in the January MPR.”

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Recent data on consumption and the housing market suggest economic growth in the final quarter of 2016 may have been slightly stronger than the 1.5 percent the bank had forecast, but exports continue to face ongoing competitiveness challenges, it said.

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