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Canada's interest rates remain unchanged

If there was any doubt remaining, Mark Carney has cleared the air: Interest rates will not be going up - and certainly not down - any time soon.

Here's why: Canada's economy is growing at a slower pace than expected - although a pickup is likely later this year - and inflation remains weak, for now, while consumer debt and the housing market appear to be stabilizing, if not cooling.

At the same time, the global outlook has also slowed, even as fiscal and debt concerns in the United States and Europe have dissipated slightly.

"So, all those factors together push back the need for any potential adjustment, any potential tightening, but this is still the ultimate direction," Carney, the Bank of Canada governor, said Wednesday.

But, "I'm not going to categorically rule out anything," he said. "At a point in the future ... we'll adjust monetary policy, including guidance, as appropriate, in order to meet our inflation target."

That inflation target is 2 per cent, and it is nowhere near that level. Prices were up just 0.8 per cent year-over-year in November and it is unlikely they moved much higher in December - we'll find that out Friday, when Statistics Canada delivers that month's inflation report.

The Bank of Canada says inflation will stay below 2 per cent until the third quarter of 2014. So, as expected, the bank kept a lid on borrowing costs, with its trendsetting overnight rate remaining at a near-record low 1 per cent unchanged since September 2010.

What has changed, though, is the way the central bank delivers that message. For the first time, policymakers on Wednesday combined their regular-rate decision announcement with the bank's Monetary Policy Report

But the only new wrinkles in the bank's usually pact statement accompanying a rate announcement highlighted "the more muted inflation outlook and the beginning of a more constructive evolution of imbalances in the household sector."

Source: Gordon Isfeld, PostMedia News