UPDATE 2-Bank of Canada keeps rate-hike talk, eyes fiscal cliff

Tue Dec 4, 2012 10:40am EST
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* Rates on hold; BoC repeats hike likely needed over time

* Analysts say BoC not backing away from rate-hike stance

* Underlying economic momentum softer than expected

* Bank says inflation to hit 2 pct target over next 12 months

* Says fiscal cliff holding back U.S. expansion

By Louise Egan and Randall Palmer

OTTAWA, Dec 4 (Reuters) - Canada's central bank was unwavering on Tuesday in its view that it may need to hike interest rates, not cut them, even as the country's economy shows signs of slowing and uncertainty over the U.S. fiscal cliff shakes North American economic confidence.

Bank of Canada Governor Mark Carney - who will become head of the Bank of England in July - has held the overnight lending rate at 1 percent since September of 2010, the longest period of bank inactivity on rates since the early 1950s.   Continued...