Bank of Canada maintains its interest rate at 1% (by Warangkana Chomchuen)

NEW YORK (MarketWatch) -- The Bank of Canada announced Tuesday that it will keep its benchmark interest rate unchanged at 1%. The overnight lending rate has been kept at this level since September 2010. The bank said Canadian economic momentum is "slightly firmer" than it had expected in January and the degree of economic slack has been smaller than expected. Given the reduced slack in the economy and firmer underlying inflation, the bank said "some modest withdrawal of the present considerable monetary policy stimulus may become appropriate." The timing and degree of the withdrawal will depend on domestic and global economic development, the bank said. Canada's economy is expected to grow by 2.4% in both 2012 and 2013 before moderating to 2.2% in 2014, according to the bank's projection. Inflation is expected to be around 2%.