Ottawa, Jan 18 (IANS) The Bank of Canada announced Tuesday that it is maintaining its target for the overnight interest rate at 1 percent.

The bank rate is correspondingly 1 1/4 percent and the deposit rate is 3/4 percent, reported Xinhua.

In a statement, the bank noted that the global economy has deteriorated and uncertainty has increased since it released its last analysis in October.

“The sovereign debt crisis in Europe has intensified, conditions in international financial markets have tightened and risk aversion has risen,” said the bank.

“The recession in Europe is now expected to be deeper and longer than the bank had anticipated in October,” the statement said.

The bank believed that European authorities would implement sufficient measures to contain the crisis, “although this assumption is clearly subject to downside risks”.

The Bank of Canada expected that US recovery would proceed at a more modest pace because of deleveraging, fiscal consolidation and the spillovers from Europe.

“Chinese growth is decelerating as expected towards a more sustainable pace,” the bank added.

According to the bank, problems abroad are expected to slow the growth of the Canadian economy, and that most of the growth will be based on consumer demand spurred by low interest rates, rather than by exports.

The bank estimated that the economy grew by 2.4 percent in 2011 and projected a 2-percent growth in 2012 and 2.8 percent in 2013. The economy is only anticipated to return to full capacity by the third quarter of 2013.