FXstreet.com (Barcelona) - Canadian Central Bank has lowered down considerably its expectations of economic growth as well as the and the inflation pressures for this year, in a context of weaker US economy, in the Bank's monthly Monetary Policy Report.

Financial conditions have worsened in the last month, leading to tighter credit conditions in the industrialized world, on the other side the US housing slump has been deeper than previously expected, therefore, the Bank expects US economy to grow considerably below the previous estimations.

According to the report, Canadian economy is operating above its production capacity, despite the slowdown in the latest quarter, nevertheless, the weaker US economy will contribute negatively to the Canadian export growth. In this sense, the Bank expects domestic demand to remain strong enough supported by continued income growth associated with high commodity prices.

Canadian economy will grow 1.8% in 2008 and 2.8% in 2009, and both core and total CPI inflation decreasing to levels below 1.5%. by the middle of 2008 to grow around 2% in 2009.