Thursday, January 9, 2014

ECB holds rate, as expected, Draghi to comment later

    The European Central Bank (ECB) held its refinancing rate steady at 0.25 percent, along with its other main rates and said its president, Mario Draghi, would comment at a press conference later today.
    The ECB was widely expected to maintain its rates after having cut rates for a second time in 2013 in  November to the current level. The ECB cut rates by 50 basis points in 2013.
    But economists are also looking to the ECB for further ways to stimulate the euro zone economy.
    Earlier this week data showed that the unemployment rate remained steady at 12.1 percent in November, the eight month of unchanged jobless numbers, with youth unemployment also steady at 24.2 percent and even ring in some countries, such as Spain, with jobless rate of 57.7 percent.
    Inflation is also very low, with headline inflation falling to 0.8 percent in December from November's 0.9 percent, adding to worries over deflation. A surprisingly-large drop in inflation to 0.7 percent in October prompted the ECB's rate cut in November. The ECB targets inflation that is below, but close to 2.0 percent.
   The euro area's Gross Domestic Product rose by only 0.1 percent in the third quarter from the second for annual contraction of 0.4 percent, the seventh quarter of a shrinking economy.



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