- Nick Kounis, head of macro research at ABN Amro Bank NV
The European Central Bank left interest rates unchanged on Thursday, as economic performance in the eurozone is expected to remain weak and Spain resists asking for a full bailout. The benchmark interest rate held at its historic low of 0.75 per cent, meeting analysts' expectations. In September, the ECB pledged its readiness to purchase unlimited quantity of government bonds, easing the pressure on the bond yields of eurozone's indebted nations such as Spain. However, no country has done it so far, but this scheme may be considered as an effective insurance policy.
"In normal times, with the economic outlook in Europe, a rate cut would probably be justified," said Nick Kounis, head of macro research at ABN Amro Bank NV in Amsterdam. "But we're not in normal times and a rate cut won't achieve anything."
"We fully expect Mr. Draghi to continue to emphasize that the decision on calling for help rests solely in the hands of the Spanish government," said Nick Matthews, senior European economist at Nomura International Plc in London.
The Stoxx Europe 600 Index plunged 0.17 per cent to 270.58. Germany's DAX Index fell 0.39 per cent to 7,204.96, while France's CAC 40 Index erased 0.06 per cent to 3,407.68.
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