European monetary policy left alone

Dec. 6, 2012 at 12:02 PM
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FRANKFURT, Germany, Dec. 6 (UPI) -- Two central banks in Europe left their monetary policy positions intact Thursday with the European Central Bank lowering its economic forecast.

The Bank of England left its key lending rate at 0.5 percent and left its $600 billion asset purchasing program in place. The Bank of England explains its decisions with the release of meeting minutes three weeks after the policy board meets.

The ECB said it would maintain a lending rate of 0.75 percent. ECB President Mario Draghi told reporters the eurozone economy is expected to shrink 0.3 percent to 0.9 percent in 2013 and then grow between 0.2 percent and 2.2 percent in 2014.

That is a longer wait for growth than previously expected. In its last forecast, the ECB said 2013 would see economic growth in the eurozone of 0.5 percent.

From quarter to quarter, the gross domestic product in the 17-member eurozone dropped 0.2 percent in the second quarter and 0.1 percent in the third.

"Available statistics ... continue to signal further weakness in activity in the last quarter of the year," Draghi said.

"A gradual recovery should start later in 2013 as our accommodative monetary policy stance and significant improvements in the financial market confidence work their way to private domestic expenditure," he said.

Downside risks are inherent in the ongoing sovereign debt crisis "and governance issues in the euro area," he said.

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