The Bank of Canada on Wednesday announced to keep its target for the key lending rate at 1 percent despite of a recent rise in inflation.
The central bank admitted that inflation has moved up to around the 2 percent target "sooner than anticipated," but blamed it on " temporary effects" of higher energy prices and "exchange rate pass- through."
Core inflation remains significantly below 2 percent although it has drifted up slightly, said the bank, stressing global economic growth was weaker than anticipated and the U.S. economy has lost some momentum.
The central bank said it expected a pickup in exports soon. It also mentioned improved corporate profits and a paying down of household debts, and continued to predict a soft landing in the housing market.
"Weighing recent higher inflation readings against slightly increased risks to economic growth leaves the downside risks to the inflation outlook as important as before," the bank said.