The Bank of Canada left its target for the overnight rate unchanged at 2.25%, saying weaker economic activity and higher inflation are creating competing pressures for monetary policy. The central bank said keeping the policy rate steady for now balances those risks.

Officials said there is limited evidence that higher energy prices are feeding into broad-based inflation, while adding that they would raise rates if needed to keep inflation under control. The bank said inflation is expected to be around 3% in the coming months.

It also projected that economic growth will resume in the second quarter, although spare capacity in the economy is expected to persist.