UPDATE 3-Canada economy grew faster than expected, dims rate cut talk

Fri Feb 28, 2014 10:03am EST
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* Growth hits 2.9 percent, highest since first quarter

* Statistics Canada revises Q1 and Q2 growth figures up

* Bank of Canada had expressed fears over weaker growth

By David Ljunggren

OTTAWA, Feb 28 (Reuters) - Canada's economy grew more than expected in the fourth quarter of 2013, a development that could help kill off any remaining market chatter that the Bank of Canada might cut interest rates to boost growth.

Statistics Canada said on Friday that annualized fourth quarter growth was 2.9 percent, more than the 2.5 percent markets had been anticipating.

Statscan also sharply raised its growth figures for the first two quarters of 2013, indicating the economy had done better than the Bank of Canada realized.

The central bank has kept its key interest rate at a near record low of 1.0 percent since September 2010 and says it will not move until the economy picks up speed and weak inflation rises. Some analysts say the bank could even cut rates.

"The revisions certainly change the tone to how the economy performed in the first half of 2013 ... the economy had better momentum than expected through 2013," said Doug Porter, chief economist at BMO Capital Markets.   Continued...