* Rates seen flat for rest of '09, in line with BoC pledge
* Odds of quantitative easing seen at 35 pct or less (Adds response from additional primary dealer)
TORONTO, June 1 (Reuters) - The Bank of Canada, sticking to a recent pledge, will keep its benchmark interest rate unchanged at 0.25 percent for at least the rest of the year, Canada's primary securities dealers predicted on Monday.
The central bank is set to make its next rate announcement on June 4. At the last rate announcement in April it took the unusual step of providing guidance on rates, saying the overnight rate will stay at 0.25 percent until the end of the second quarter of 2010, conditional on the inflation outlook.
With the central bank's commitment in mind, 11 dealers surveyed by Reuters forecast the Bank of Canada would keep the overnight rate at 0.25 percent right through until at least the end of this year. One dealer was unavailable.
"We have it on hold for at least for a year, as the bank itself has highlighted," said Carlos Leitao, chief economist at Laurentian Bank Securities, echoing comments from other dealers.
The poll was conducted after government data showed Canada's economy shrank 5.4 percent in the first quarter, at the fastest pace since 1991, pushing the country into its sharpest two-quarter downturn on record.
Still, the numbers were well ahead of analysts' and the Bank of Canada estimates on the first quarter contraction. [ID:nN01454666]
Market players will also monitor whether there will be a change in the central bank's thinking about using nonstandard ways to help the economy emerge from recession when it announces the rate decision on Thursday.
All dealers polled saw a low probability that the central bank would engage in some form of quantitative easing -- printing money to buy market securities -- at some time over the next 12 months.
The dealers pegged the odds at 35 percent or less as economic figures have shown improvement in recent weeks, increasing the chances that the economy will right itself without extra help from the central bank.
The central bank has made no explicit commitment to taking nonconventional measures to spur the economy, and has generally talked down the idea.
"The general perception that most people have on the North American economy is that it's stronger than people were expecting, so that's going to give them some peace of mind," said John Clinkard, chief economist at Deutsche Bank Canada.
"So to adopt a nuclear tool is just not, I think, appropriate at this time."
Market watchers are also focused on whether the Bank of Canada will address the recent strength in the Canadian dollar, which has steadily climbed due to a combination of higher prices for key Canadian commodities, some upbeat economic data and lower demand for the U.S. dollar.
The currency rallied 9.3 percent in May, its biggest monthly gain since at least October 1950, according to Bank of Canada data that dates back to 1950. COMPANY JUNE JULY SEPT YR END
ACTION ACTION ACTION RATE BMO CAPITAL MARKETS NO MOVE NO MOVE NO MOVE 0.25 CASGRAIN & CO LTD NO MOVE NO MOVE NO MOVE 0.25 CIBC WORLD MARKETS INC. NO MOVE NO MOVE NO MOVE 0.25 DESJARDINS SECURITIES NO MOVE NO MOVE NO MOVE 0.25 DEUTSCHE BANK SECURITIES NO MOVE NO MOVE NO MOVE 0.25 HSBC SECURITIES NO MOVE NO MOVE NO MOVE 0.25 LAURENTIAN BANK SECURITIES NO MOVE NO MOVE NO MOVE 0.25 MERRILL LYNCH CANADA INC. N/A N/A N/A N/A NATIONAL BANK NO MOVE NO MOVE NO MOVE 0.25 RBC CAPITAL MARKETS NO MOVE NO MOVE NO NOVE 0.25 SCOTIA CAPITAL INC. NO MOVE NO MOVE NO MOVE 0.25 TORONTO-DOMINION BANK NO MOVE NO MOVE NO MOVE 0.25
PCT CHANCE OF QUANT EASING WITHIN
12 MTHS BMO CAPITAL MARKETS 35 PCT CASGRAIN & CO LTD 25 PCT CIBC WORLD MARKETS INC. 35 PCT DESJARDINS SECURITIES 30 PCT DEUTSCHE BANK SECURITIES 25 PCT HSBC SECURITIES 10 PCT LAURENTIAN BANK SECURITIES 25 PCT MERRILL LYNCH CANADA INC. N/A NATIONAL BANK 30 PCT RBC CAPITAL MARKETS 20 PCT SCOTIA CAPITAL INC. 25 PCT TORONTO-DOMINION BANK 25 PCT (Additional reporting by Frank Pingue; Editing by Jeffrey Hodgson)
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