The deteriorating global picture is turning what had been a soft patch for Canada’s export-heavy economy into more than a year of sluggish growth, the Bank of Canada said today in a new quarterly forecast.

 A day after leaving their benchmark interest rate at 1% for a ninth consecutive meeting, Bank of Canada Governor Mark Carney and his officials fleshed out why they believe the economy will perform below its potential until 2013, and why they’re unfazed by hotter-than-expected inflation in recent months.

 Plus, although the central bank sees things improving within two years, policymakers again stressed that a failure to contain the European debt crisis could mean an even bleaker few months ahead.

 “The economic outlook in Canada has weakened, reflecting the substantially downgraded outlook for the global economy,” Carney and his policy team said today in their Monetary Policy Report.

 Click here to read more in the Globe and Mail

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