Finance Minister Jim Flaherty is calling on Canadian businesses to help fuel economic growth by ramping up investment and creating jobs, as Canada turns the corner from the recession.

Flaherty, who is set to deliver a budget update when Parliament resumes on Monday, said he doesn't expect the Canadian economy to grow by the blistering 3.9 per cent rate it did in the first quarter of this year.

However, he told CTV's Power Play Tuesday that he predicts "modest, moderate growth" through 2011, fuelled in part by businesses continuing to boost investment in machinery and equipment.

"We know that Canadian companies are cash-rich right now," Flaherty said. "It's time for them to step up to the plate, to invest, to create jobs. That's certainly our focus this year in the Canadian economy."

Flaherty's remarks came on a day that the loonie continued to gain ground over the U.S. greenback after the central bank once again locked in the benchmark lending rate at 1 per cent.

It's the sixth consecutive time that Bank of Canada Governor Mark Carney has held the rate at the super low level.

The rate is now expected to hold at 1 per cent until July 19 at the earliest.

The Canadian dollar rose nine-tenths of a cent to 103.24 cents U.S. at the closing bell. The rise was partly attributed to weakening in the greenback due to rising optimism related to Greece's debt troubles.

Carney said that while commodity prices remain at elevated levels, the inflation rate is expected to fall from the current 3 per cent to the target 2 per cent by mid-2012, without the help of an interest rate hike.

Carney said there continue to be significant risks to the post-recession recovery, but that the economy is largely trucking along as expected.

The Bank of Canada's policy statement said "considerable monetary policy stimulus in place will be eventually withdrawn," but gave no hints as to when that might occur and said it would only take place after "careful consideration."

David Madani, the Toronto-based Canada economist for Capital Economics, said he believes the Bank of Canada will hold steady at 1 per cent for the remainder of 2011 and all of 2012.

"If we are wrong, rates are unlikely to go up more than once or twice before the economic recovery will show clearer signs of struggling," Madani cautioned.

He added that he believes the Canadian housing market will experience a downturn later this year and next "that will lead to a marked slowdown in consumer spending and a more severe contraction in residential investment."

Madani also pointed out that the Bank of Canada listed ongoing financial difficulties in Europe, and supply chain disruptions due to the earthquake in Japan, as significant concerns.

"All things considered, we still see little need for the Bank of Canada to raise interest rates this year, given the strength of the Canadian dollar and the considerable slack and disinflationary pressures in the economy, particularly when a correction in the over-heating housing market could soon derail the domestic recovery," Madani wrote.

Earlier in May, the Organization for Economic Co-operation and Development urged the Bank of Canada to raise its key lending rate by 25 basis points as a means of curbing creeping inflation.

"Monetary policy is currently very accommodative, and short-term inflation expectations appear to be inching upwards," the report stated. "The Bank of Canada should soon resume tightening at a moderate pace."

However, the OECD said while an immediate interest rate increase was preferred, it didn't expect to see anything before July at the earliest.

Meanwhile, Flaherty also told Power Play he remains concerned about the ongoing fiscal instability in parts of Europe, which could yet negatively impact the global economy.

"Canada's not an island. We've been buffeted quite a bit in the past few years by difficulties that have arisen elsewhere," Flaherty said. He later added: "The idea, we hope, is to avoid shocks in the world economy going forward."

On Tuesday the Wall Street Journal reported that Germany may reconsider a push to reschedule Greek debt early. If that were to take place, Greece would likely have a better chance of receiving a new package of financial aid.

Other reports out Tuesday said European officials were preparing new support measures for Greece, which could amount to euro20 billion in aid, along with three times that which could be raised through austerity measures.

The U.S. dollar is typically viewed as a safe haven in times of European economic turbulence. As a result, actions that stabilize the euro often have a negative effect on the greenback.