UPDATE 3-Bank of Canada drops rate-hike talk, sees slower growth

Wed Oct 23, 2013 2:55pm EDT
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* Omits rate-hike mention for first time since April 2012

* Sees rising risk from persistently weak inflation

* Sees delay in inflation returning to 2 percent target

* Downgrades growth projections across the board

* C$ sinks on news, fixed-income market rallies

By Louise Egan and Randall Palmer

OTTAWA, Oct 23 (Reuters) - The Bank of Canada has abandoned 18 months of warnings that interest rates will one day have to rise, saying on Wednesday that a soft economy and persistently weak inflation mean there is as much chance of a rate cut as a rate hike.

The surprise policy shift, which knocked the Canadian dollar to a one-week low and sent bond prices higher, came in a statement in which the central bank kept its key rate at 1.0 percent and dropped any hint of an eventual rate increase.   Continued...