This week – hidden amongst all the Budget 2013 news – the ECB held the eurozone interest rate at the record low of 0.75%.
There had been hints of a drop last month – but that didn’t happen. ECB interest rates have been at 0.75% for five months, after July’s cut from 1%. The Bank of England also kept its main interest rate unchanged on Thursday, leaving it at 0.5%.
ECB President Mario Draghi said the bank expected the eurozone’s economy to shrink by about 0.5% this year, before recovering later in 2013.
He said weak consumer and investor sentiment was weighing on growth.
Mr Draghi said rates had been left unchanged due to higher energy prices, rising taxes and the fact inflation fell from 2.5% to 2.2% last month.
Mr Draghi said the bank expected inflation to fall below 2% next year. The target rate is below but close to 2%.