The Bank of Canada is keeping its trendsetting interest rate unchanged at one per cent, where it has sat for three years.

The bank says it intends no changes as long as considerable slack remains in the economy, inflation remains muted and household finances continue to improve.

In an explanatory note to the announcement, the bank says the global economy has less momentum than anticipated.

The bank says that while Europe is showing early signs of a recovery and Japan’s situation remains promising, there is more financial volatility in emerging market economies.

However, the bank notes that China’s economy continues to grow at a solid pace.

It also says that while commodity prices have been relatively stable, geopolitical tensions are raising the global price of oil.