Bank of Canada holds rates steady with uncertainty undiminished

OTTAWA, (Reuters) - The Bank of Canada pointed to undiminished uncertainty and a "significant amount" of slack in the Canadian economy as it held rates steady on Wednesday, noting that inflation is below expectations and growth set to slow as 2016 draws to a close. The decision by the central bank to leave interest rates unchanged at 0.50 percent was widely expected and sets the stage for a divergence in monetary policy with the United States, where the Federal Reserve is expected to hike rates later this month. Dropping its usual language about the balance of risks, the Bank of Canada said the current state of monetary policy "remains appropriate." It said more moderate growth is expected after a rebound in the third-quarter, but business investment and non-energy goods exports continue to disappoint and total CPI inflation is slightly below expectations despite a pickup in recent months. "There have been ongoing gains in employment, but a significant amount of economic slack remains in Canada, in contrast to the United States," the bank said in a statement. While global economic conditions have strengthened, the bank also said that uncertainty, which has been undermining business confidence and dampening investment in Canada's major trading partners, "remains undiminished." (Reporting by Andrea Hopkins and Leah Schnurr)