- Mario Draghi, the President of ECB
The European Central Bank left its benchmark interest rate unchanged at a record low of 0.75%, after Mario Draghi pledged bank's readiness to buy government bonds, and as a result it lowered borrowing costs and boosted confidence that the Eurozone can emerge from recession next year. In the meantime, the ECB has revised down its region's growth forecasts for 2012 and 2013, saying the economic weakness will persist in the next year as well. The economy is now expected to shrink by 0.5% this year, more than the 0.4% contraction predicted earlier in September, while the growth forecast for 2013 stands for a 0.3 contraction. However, in 2014, the Eurozone GDP will expand by 1.2%.
"Economic weakness in the euro zone is expected to extend into next year," Draghi said. "A gradual recovery should start later in 2013.By the second part of the next year, we should see the beginning of a recovery."
"I expect solid growth for the euro area next year and no change in interest rates," said Ulrich Kater, chief economist at DekaBank Deutsche Girozentrale in Frankfurt. "Only if the economy doesn't grow might the ECB have to come up with a Plan B and lower interest rates."
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