The Bank of Canada is holding interest rates steady for the first time in a year.

The central bank says based on the assessment of recent economic data, the key rate will remain at 4.5 per cent.

However, it is keeping the door open to further rate hikes if the economy or inflation run hotter than expected.

Recent data shows inflation slowed to 5.9 per cent in January while the economy posted no growth in the fourth quarter.

The annual inflation rate is still expected to fall to around three per cent by mid-year.

-With Files from the Canadian Press-