Canada's economy in the second half of the year is growing faster than an earlier forecast made two months ago, the Bank of Canada said Thursday.

In July, the central bank had projected the economy would rebound by 1.3 percent in the third quarter and by 3 percent in the final quarter. It also said the recession was likely over.

It now believes that the economy will perform better than the 2.3 percent contraction it had forecast, and possibly better than the 3 percent growth it expected for next year.

But the bank offered no new growth estimates.

"Stimulative monetary and fiscal policies, improved financial conditions, firmer commodity prices, and a rebound in business and consumer confidence are supporting domestic demand growth in Canada," the bank said in a statement Thursday.

"Combined with recent information on inventory adjustments and automotive production, this suggests that GDP growth in the second half of 2009 could be stronger than the bank projected in July."

The central bank also announced that it leaves its key overnight interest rate unchanged at 0.25 percent. It reiterated its commitment to leave the key rate at that level through the middle of next year as long as inflation remains in check.

The bank repeated its warning about the high Canadian dollar. "Persistent strength in the Canadian dollar remains a risk to growth and to the return of inflation to target," it said.

But the bank predicts that inflation should remain low for the foreseeable future.

(Xinhua News Agency September 11, 2009)