The Bank of Canada left its key policy interest rate unchanged Tuesday amid signs the economy is growing a bit slower than expected.

The target for the overnight rate remains at 2.5%.

“Recent data suggest that Canada’s economic growth in the fourth quarter of 2004 was marginally weaker than previously expected, owing partly to a somewhat more pronounced adjustment to the past appreciation of the Canadian dollar,” the bank said in its statement.

Economists widely expected the central bank would leave its key interest rate unchanged, given signs of slightly slower GDP growth in the final months of 2004.

In its statement the bank suggested that there are rising loonie raises questions about the future growth of the Canadian economy.

“The bank now expects the Canadian economy to operate a little further below its full production capacity in 2005.”

That could mean that further interest rate increases are still many months away.

Bank of Canada governor David Dodge is expected to elaborate on the bank’s view of the economy in a news conference on Thursday after releasing an update to the central bank’s monetary policy report.

South of the border, The U.S. Federal Reserve is scheduled to meet next week. Some observers believe the Fed will raise interest rates for the sixth time, lifting its key policy rate to 2.50% from the current level of 2.25%.

The Bank of Canada’s next scheduled date for announcing the overnight rate target is March 1.