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The decision Tuesday to keep the policy rate at one per cent came despite a mostly upbeat assessment of the Canadian economy from the central bank that predicts faster growth and a quicker return to full capacity.

The bank’s next scheduled date for an interest rate announcement comes May 31.

Meanwhile, it said the economy will grow at 2.9 per cent this year, half a point faster than it estimated in January. As well, the economy will return to full capacity in just over a year, six months earlier than previously thought.

Despite the improved outlook — which brings the bank in line with private sector economists and recent strong economic indicators — that bank chose to highlight the pitfalls to the recovery, which appear to be growing with each report.

Globally, high commodity prices are igniting inflationary pressures, while the earthquake and tsunami disaster in Japan are disrupting supply chains. Meanwhile, Europe still faces debt and banking challenges and the U.S. is beset by both government and household debt.

In Canada, the bank twice cited concern that the high-flying loonie is eating away at exports, a strength in the economy.

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