Canada's central bank maintained its key lending rate at 0.25 percent on Tuesday, saying it plans to hold it at this historically low level until mid-2010 to shore up economic recovery. 'The global economic recovery is under way, supported by continued improvements in financial conditions and stronger domestic demand growth in many emerging- market economies,' the Bank of Canada said in a statement. The central bank's outlook for global growth over the next two years is 'somewhat stronger' than it had projected in October. However, the economic turnaround that started in the third quarter of 2009 continues to depend on 'exceptional' monetary and fiscal stimuli, it said. Canadian inflation turned positive in the fourth quarter and has been 'slightly higher' than expected in recent months. Nevertheless, 'considerable excess supply remains' and the economy has been operating at about 3.75 percent below capacity, the central bank said. As the turnaround firms, the central bank projects the economy will grow by 2.9 percent in 2010 and 3.5 percent in 2011, after contracting by 2.5 percent in 2009, it said. The figures were previously forecast at 3.0 percent, 3.3 percent and 2.5 percent, respectively. Increased confidence, improving financial conditions, global growth and higher terms of trade continue to shape the recovery, it noted. The 'persistent strength' of the Canadian dollar and low US demand for goods however continue to act as 'significant drags' on the Canadian economy. Going forward, the private sector is expected to become 'the sole driver of domestic demand growth in 2011,' it said, as exports fall. 