"Output is expected to recover at a slow pace, in particular owing to a gradual improvement in domestic demand supported by the accommodative monetary policy stance"
- The European Central Bank
Policymakers in Frankfurt decided to refrain from any additional stimulus measure, at a time when the Eurozone countries seem to have finally shown some signs of stabilization, leading to the revision of the economic outlook. The European Central Bank's refinancing rate, which lenders have to pay when they borrow funds from the central bank, was left unchanged at a record-low of 0.5%, while the deposit rate still stands at zero. There have been made no adjustments to ECB's monetary policy since May 2, when the bank trimmed its rate by 0.25%.
Meanwhile, the European Central Bank has revised up its forecast for the 17-nation economy this year, however, Mario Draghi was quick to end any speculation the bank will tighten its policy in response to the latest economic improvement. The ECB now expects the economy to contract only 0.4% this year, rather than the 0.6% contraction seen in June. However, the bank downgraded its outlook for the next year, saying the economic output should rise only 1% in 2014, compared with 1.1% estimated earlier. Furthermore, Draghi affirmed once again that consumer prices will stay comfortably below 2% target level both this year and the next one. He also stressed out, the Eurozone economy is now more likely to deteriorate rather than improve at a rapid pace, due to renewed geopolitical tensions.
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