The Bank of Canada today announced that it is maintaining its target for the overnight rate at 2%. The operating band for the overnight rate is unchanged, and the Bank Rate remains at 2.25%.

The decision was widely expected by economists. However, most analysts expect the central bank to raise rates in September.

In a statement, the central bank said that its outlook for economic growth and core inflation in Canada is little changed from the April Monetary Policy Report.

The bank said the “the Canadian economy is judged to be operating slightly closer to full production capacity than had been anticipated in April and is now expected to be at its production potential by mid-2005. Core inflation is still projected to move back up to the 2% inflation target by the end of 2005. However, the short-term projection for total CPI inflation has been raised to reflect higher-than-expected world oil prices.”

Against this background, the bank said it decided to leave the target for the overnight rate unchanged.

The central bank’s next scheduled date for announcing the overnight rate target is September 8.