The Bank of Canada today announced that it is maintaining its target for the overnight rate at 2.5%. Most analysts had expected the central bank to stand pat on rates.

The central bank said the operating band for the overnight rate is unchanged, and the Bank Rate remains at 2.75%.

In its statement, the bank said that economic activity in Canada has been broadly in line with the bank’s expectations, with core inflation remaining below the 2% inflation target.

It added that “although oil prices have declined, global economic growth prospects have moderated slightly. The U.S. dollar has depreciated further against major floating currencies, including the Canadian dollar. If exchange rates were to persist at current levels, and if all other economic and financial factors were to remain unchanged, there would be a dampening effect on aggregate demand for Canadian goods and services.”

In light of these considerations, the bank decided to leave the target for the overnight rate unchanged.

On a more postive note, the bank said “the underlying trends in the global economy continue to point to solid economic growth.”

The bank said the main risks to the Canadian economy include, “global imbalances, the realignment of currencies, commodity prices, the growing presence of emerging market economies such as China and India, and the related adjustments within the Canadian economy.”

The next scheduled date for announcing the overnight rate target is Jan. 25, 2005.