The Bank of Canada stuck to a positive-but-cautious outlook in its latest Monetary Policy Report, saying that while its outlook for global growth is stronger than it predicted in October, the recovery continues to depend on stimulus and “extraordinary measures” taken to support financial systems.

As for Canada, the Bank said economic growth resumed in the third quarter of 2009 and CPI inflation turned positive in the fourth quarter. However, with considerable excess supply and a strong dollar, the Bank still projected the Canadian economy won’t return to its full capacity until the third quarter of 2011.

As expected, the Bank of Canada reiterated its conditional commitment to keep interest rates low until the second quarter of 2010. With some lenders posting “prime minus” rates, this puts a number of variable-rate mortgages below the two per cent mark.

The Monetary Policy Report said the low rates have contributed to solid growth rates in mortgage and consumer credit, the latter driven by draws on personal lines of credit and HELOCs.