The Bank of Canada held its benchmark overnight lending rate steady at 4.25 per cent Tuesday and said the risks to its forecast remain balanced, despite the wild swings that have recently swept through Canadian and global financial markets.

The no-move announcement surprised virtually no one. Every economist polled by news agencies had predicted the central bank would make no change to its key rate, which hasn't budged since last May 24, when it boosted it by a quarter of a percentage point.

The Bank of Canada said the sell-off that has shaken world financial markets in the last week has not changed its underlying view that the Canadian and global economies are "evolving broadly in line with the bank's expectations" as they were laid out in January, when it last updated its monetary policy report.   

"Despite recent volatility in global financial markets, the bank continues to judge that the risks to its inflation projection are roughly balanced," it said in a statement accompanying the rate announcement.

"The main downside risk continues to be that growth in the U.S. economy could be lower than expected."

The central bank continues to say the Canadian economy is operating at, or just above, its production capacity.

No rate changes likely in near-term: analysts

TD Bank economist David Tulk predicts that the Bank of Canada won't make any change in interest rates for the rest of the year.

"Even if economic activity slows by more than expected, the observed weakness in labour productivity may keep the Bank on hold as they cite a slower growth rate of potential output," he said in a morning note.

RBC Economics also sees no rate change in 2007 but said rate hikes are "likely" in the second half of 2008.

"Today’s unchanged statement may prove disappointing to those looking for a rate cut later this year as the futures market was fully pricing in 25 basis-point rate cut by year-end before the announcement," said a commentary from RBC senior economist Dawn Desjardins.

The next scheduled Bank of Canada rate policy announcement is set for April 24. The next monetary policy report will follow two days later.