Eurozone Monetary Policy


ECB keeps rates unchanged, eyes recovery in 2013

At its 10 January policy meeting, the European Central Bank (ECB) kept the refinancing rate unchanged at a record low of 0.75%. The decision, which was widely expected by the market, represents the sixth consecutive month in which the ECB leaves the policy rate unchanged.

Monetary authorities expect economic activity to remain moderate at the beginning of 2013, in step with the continued weakness seen in the last quarter of 2012. However, a gradual recovery is expected to take place only by the end of 2013. In particular, the ECB underlined the role of its monetary policy stance, which helped to improve "financial market confidence and reduced fragmentation" and whose effects are seen passing through the real economy over the course of the year.

Regarding the outlook for price developments, the ECB believes that risks are on balance. Inflation is seen dropping below 2% over 2013 and price pressures are expected to remain moderate, on the back of "weak economic activity in the Euro area and well-anchored long-term inflation expectations".

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Euro Monetary Policy January 2013

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