The Bank of Canada has taken a cautious approach and is standing pat on interest rates. The overnight rate will remain at 2.75%.

There has been some pressure on the central bank to lower rates to bring down the Canadian dollar. Its unexpected rise against the declining American dollar has been hurting exports, especially auto exports. But the Bank’s accompanying monetary statement shows that the central bank doesn’t plan to lower rates in the near future. It seems more worried about reaching full capacity and consumer spending than Canada’s export trade.

The central bank said core inflation remains below its 2% target, while economic indicators are picking up as expected.

The bank continues to expect growth in the Canadian economy to strengthen during the fourth quarter of 2003 and through 2004, on stronger consumer spending and renewed business investment.

“Stronger economic growth abroad should also boost foreign demand for Canadian goods and services, although this source of strength will be tempered by the higher value of the Canadian dollar,” the central bank said.

Rebounding U.S. growth, and the support it will provide to Canada, means the Bank of Canada is expected to hold off on rate changes until mid-2004, BMO Nesbitt Burns chief economist Sherry Cooper said.

“A rip-roaring Canadian dollar was not enough by itself to prompt the bank into action, although it is forcing the bank to keep its options open,” she said.

The bank’s next interest decision is set for December 2.