Friday, 7 December 2012

ECB sees eurozone economy shrinking again next year

The European Central Bank left interest rates unchanged on Thursday after its monetary policy meeting but cut its growth and inflation forecasts for the eurozone economy. Reuters reports:

The European Central Bank pondered an interest rate cut on Thursday and predicted the euro zone economy would shrink again in 2013, leaving the door open to a possible reduction in borrowing costs early next year...

In the end, the ECB left its main interest rate at a record low 0.75 percent for the fifth month running despite new forecasts which suggest the euro area economy will contract next year as it has this. It left the deposit rate at zero.

The Bank of England also left monetary policy unchanged after its meeting on Thursday.

Economic data from Europe on Thursday were mixed. German factory orders rebounded 3.9 percent in October after having fallen 2.4 percent in September. However, the UK trade deficit widened in October as exports fell.

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