- Nick Matthews, senior European economist at Nomura International Plc
On Thursday European policymakers in Frankfurt decided to refrain from any additional stimulus measures after recent economic data signalled that the Eurozone economy may be recovering from its longest-ever recession. The European Central Bank President Mario Draghi left the main refinancing rate unchanged at record low of 0.5% for a third consecutive month, after reducing it by 0.25% in May. This decision was predicted by the majority of economists, as this week's report showed the number of unemployed people dropped slightly. At the same time, the deposit rate was kept at zero, while ECB's marginal lending stood at 1%. During the last meeting Draghi followed Marc Carney's example and introduced the forward guidance as well, promising to keep borrowing costs at or even below their current level for the foreseeable future.
The first glimmering of stabilization of 17-nation economy came last week, when Markit showed a gauge of manufacturing and services activity entered growth territory for the first time since January 2012. In further positive news for the region, the number of unemployed people fell by a seasonally adjusted 24,000 in June, totalling 19.266 million, although the decline was not big enough to budge the jobless rate from 12.1%. Moreover, the measure of economic confidence in the Eurozone climbed to the highest in 15 months in July.
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