The result could have been a vicious circle involving low economic activity, even more funding stress for banks, and a further reduction in lending. If that development had taken hold, a danger of deflation would have been imminent. BIS central bankers’ speeches  1  In early December, the ECB announced a set of powerful monetary policy measures to deal with this threat.
  Net exports are expected to remain a source of weakness, owing to sluggish foreign demand and ongoing competitiveness challenges, including the persistent strength of the Canadian dollar.   Overall, the Bank expects that growth in Canada will be slow through mid-2012 before picking up as the global economic environment improves, uncertainty dissipates and confidence increases.