Canada's central bank on Tuesday kept its key lending rate at one percent as expected, citing weaker growth prospects for global economy.
"While the economic expansion in the United States continues at a gradual but somewhat slower pace, developments in Europe point to a renewed contraction," the bank said in a statement.
The bank noted "periods of considerable volatility" in financial conditions.
It said the European crisis will likely be contained, but added that this assumption is subject to "downside risks."
In China and other emerging economies, meanwhile, "the deceleration in growth has been greater than anticipated, reflecting past policy tightening and weaker external demand," the bank said.
Growth in Canada was expected to be moderate before picking up through 2013, driven by consumption and business investment, according to the Bank of Canada forecast.
Exports were projected to remain below their pre-recession peak until the beginning of 2014, it said, due to the high Canadian dollar and lower foreign demand -- amid a "sizeable" drop in commodity prices.
Housing activity was also expected to slow from record levels.
Source: AFP American Edition