The Bank of Canada announced on Thursday that it is maintaining its target for the overnight rate at 0.25%, reporting that global economic and financial developments have been broadly in line with the bank’s expectations.

“Following a deep, synchronous recession, recent indicators point to the start of recovery in major economies, supported by aggressive policy stimulus and the stabilization of global financial markets,” the bank said. “In Canada, economic growth, the output gap, and inflation in the first half of 2009 have evolved largely as expected in the Bank’s July Monetary Policy Report.”

The Bank Rate is unchanged at 0.5% and the deposit rate is 0.25%. The bank’s announcement was in line with economists’ expectations.

“The announcement was largely a re-iteration of previous announcements, with certain minor changes,“ said Grant Bishop, economist at TD Economics.

The bank noted that fiscal and monetary stimulus have helped to support growth in domestic demand, along with improved financial conditions, firmer commodity prices and a rebound in business and consumer confidence. As a result, the bank said GDP growth in the second half of 2009 could be stronger than the bank projected in July. In its July Monetary Policy Report, the bank projected third quarter growth of 1.3% and fourth quarter growth of 3%.

The central bank reiterated its commitment to keep the overnight rate at its current level until the end of the second quarter of 2010, conditional on the outlook for inflation.

It warned that persistent strength in the Canadian dollar remains a risk to growth and to the return of inflation to target.

Amid such risks, the bank retains “considerable flexibility” in carrying out monetary policy, it said.

But economists consider it unlikely that the central bank would turn to alternative policy mechanisms in the current environment.

“We see little scope for the Bank to venture into less traditional policies as long as the improved tone in financial markets and firming trend in the data persist,“ said Dawn Desjardins, assistant chief economist at RBC Economics Research.

The next scheduled date for announcing the overnight rate target is October 20.