OTTAWA, Jan. 25(Xinhuanet)-- The Bank of Canada warned Tuesday that a strong Canadian dollar will likely spell weaker-than-expected economic growth in the fourth quarter and throughout 2005.

"Recent data suggest that Canada's economic growth in the fourth quarter of 2004 was marginally weaker than previously expected, owing partly to a somewhat mor e pronounced adjustment tothe past appreciation of the Canadian dollar," the bank said in its press release.

The bank also said, since its last formal economic update in October, the Canadian dollars has continued to"trade in a higherrange," meaning a below-forecast economic performance this year is likely in the cards.

"In large part reflecting the consequences for aggregate demandof this higher exchange rate, the bank now expects the Canadian economy to operate a little further below its full production capacity in 2005 than was anticipated," the bank said.

The bank also announced Tuesday's its decision to keep the bank's key target for the overnight rate at 2.5 percent. The overnighttarget rate is the central bank's main monetary policy tool, telling major financial institutions the average interest rate that it wants them to charge each other on overnight loans.

The decision took an immediate toll on the Canadian dollar, sending it down the better part of a cent against US dollar.