OTTAWA, Nov 4 (Reuters) - The Bank of Canada on Wednesday repeated its message that the strong Canadian dollar would probably offset positive economic developments since July and that it could expand the money supply if needed.
Deputy Governor John Murray said in the prepared text of a speech he was giving in British Columbia that growth had resumed in Canada after three quarters of sharp contraction.

"But the increased volatility and persistent strength of the Canadian dollar are projected to more than offset the positive developments observed since July. This will slow growth and dampen inflation pressures, delaying the return of inflation to the 2 per cent target," he said, adding that the central bank retained considerable flexibility in its monetary policy, despite low interest rates.

(Reporting by Randall Palmer; editing by Rob Wilson) Keywords: CANADA ECONOMY/BANK (randall.palmer@thomsonreuters.com; +1-613-235-6745; Reuters Messaging: randall.palmer.reuters.com@reuters.net)

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