OTTAWA: Canada's central bank kept its key lending rate at a near historic low of one percent Thursday, saying the global economy is showing signs of improvement, but growth is still hampered by debt.
"The heightened uncertainty around the global economic outlook has decreased" since the Bank of Canada's last monetary policy report in January, it said in a statement.
"With tentative signs of stabilization in European bank funding and sovereign debt markets, conditions in global financial markets have improved and risk aversion has decreased.
"However, the global economy is still expected to grow below its trend rate as the deleveraging process in advanced economies proceeds."
The central bank said the US economy is ramping up to a "modest pace" while China is slowing to a "still-high rate" in response to weaker demand for its exports.
Commodity prices are higher than anticipated, bolstered by improved global economic conditions and a risk premium on oil. But this could ultimately dampen the economy's momentum, the bank warned.
Meanwhile, the outlook for the Canadian economy is "marginally improved" from January, it said.
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