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Bank of Canada Governor Stephen Poloz speaks with the media following an interest rate announcement, Wednesday January 22, 2014 in Ottawa.Adrian Wyld/The Canadian Press

Bank of Canada Governor Stephen Poloz still frets about ultra-low inflation – just not quite as much as he did a couple of months ago.

And with that subtle shift in Mr. Poloz's worry-meter, economists reckon the odds of an interest rate cut just got a lot longer Wednesday as the central bank left its key overnight rate unchanged at 1 per cent.

In its rate statement, the central bank dialled back recent anxieties about disinflation. It acknowledged that prices are rising a bit faster than expected so far this year, but it also cautioned that "downside risks to inflation remain important."

"Excess supply in the economy and competition in the retail sector will keep inflation well below the 2 per cent target this year," the bank said in its second rate announcement of 2014.

Mr. Poloz has previously warned about worsening disinflation risks, sparking speculation about a possible rate cut to boost the economy. The bank uses monetary policy to try to keep inflation running at or near a 2-per-cent annual rate.

The bottom line is that Mr. Poloz has no pressing reasons to either cut or raise rates. Most economists expect the central bank's next move will be a rate hike, probably in mid-2015.

"This is likely to keep the bank sidelined until there is clear evidence that both the economy and inflation are accelerating," Royal Bank of Canada assistant chief economist Dawn Desjardins said.

Bank of Montreal chief economist Douglas Porter said the latest statement marks "one of the few times" Mr. Poloz hasn't fuelled talk of possible lower rates.

"The bank maintains a relatively upbeat view on the global and Canadian economy, but they continue to frame that view in extremely cautious language, driving home the point that they are not inclined to do anything with rates for quite some time," Mr. Porter said in a research note.

The Bank of Canada hasn't changed its trend-setting overnight rate since September, 2010. The bank's next rate announcement is slated for April 16, at which time it will also update its forecasts.

Also weighing on Mr. Poloz's mind is the Ukrainian crisis, which the bank said has added a jolt of "geopolitical uncertainty" to the global economic outlook.

The central bank dismissed recent warnings from Deutsche Bank and others about an overvalued housing market. "Recent data support the bank's expectations of a soft landing in the housing market" and stabilizing household debt levels, the statement said.

Over all, the bank said a number of key measures of the economy are starting to look better, including inflation, GDP growth and exports.

The central bank said inflation is now running "slightly higher than expected," although not enough to change its longer-range forecast of gradually rising price pressures. The bank doesn't expect inflation to reach 2 per cent until late next year or early 2016.

The consumer price index rose at a higher-than-expected 1.5-per-cent annual pace in January – the fastest in 19 months.

The central bank also said economic growth is "stronger than anticipated," growing at an annual rate of 2.5 per cent in the fourth quarter and faster than earlier in the year following revisions by Statistics Canada.

Exports have also picked up a bit. "Exports have been a little stronger than previously thought but continue to underperform, and overall business investment has yet to pick up," it said.

The net result is that the bank's forecast of 2.5-per-cent GDP growth for the Canadian economy this year remains unchanged, although it acknowledged that the first three months are likely to be "softer."

The central bank is still looking for the United States to spur Canada's economy in the months ahead – despite recent slower U.S. growth, which it blamed on winter storms and frigid temperatures.