Bank of Canada leaves rate unchanged, cuts growth forecast

OTTAWA (Reuters) - The Bankof Canada kept its benchmark interest rate unchanged at 1 percent asexpected on Tuesday and cut its growth forecasts for 2010 and 2011,citing a slower than expected global economic recovery and factorslikely to crimp Canadian growth.

The central bank, which had raised the rate three times sinceJune, said "any further reduction in monetary policy stimulus would needto be carefully considered". It used similar language when raising therate in September.

The Bank of Canada cut its 2010 growth forecast to 3.0 percentfrom 3.5 percent in July and the 2011 forecast to 2.3 percent from 2.9percent. It hiked its prediction for 2012 growth to 2.6 percent from 2.2percent in July.

The bank, saying inflation had been softer than expected,predicted both core and total inflation would converge to 2 percent bythe end of 2012. In July it said both rates would remain near 2 percentuntil end-2012.

The bank said the pace of the global recovery would be hit bydeleveraging and difficult labor market dynamics and said the recoverycould be further curbed by heightened tensions in currency markets andrelated risks associated with global imbalances. (Reporting by DavidLjunggren; Editing by John McCrank)