OTTAWA (AFP) -- The Bank of Canada held its base rate at 4.25 percent for the sixth consecutive meeting, saying the upside and downside risks to the economy were "roughly balanced." In a statement, the central bank said inflation at the consumer level "should average just above one percent in the first half of 2007, returning to the two percent target in 2008." It said "core" inflation which excludes some volatile items, "should remain near two percent throughout this period."

"Despite recent volatility in global financial markets, the Bank continues to judge that the risks to its inflation projection are roughly balanced," the statement said.

Last week, official data showed the Canadian economy grew 2.7 percent in 2006.