ECB Could Be Done Helping Eurozone Economy
By DAVID McHUGH
FRANKFURT, Germany (AP) â¿¿ The European Central Bank is unlikely to offer any further help for Europe's sagging economy Thursday after already lowering interest rates to record lows and calming the region's debt crisis with its plan to buy the bonds of heavily indebted governments.
After a year that has seen â¿¬1 trillion ($1.3 trillion) in emergency loans to banks, a rate cut, and President Mario Draghi's vow to "do whatever it takes" to rescue the euro, some analysts say the ECB may consider itself finished with efforts to rescue the economy of the 17 European Union countries that use the euro.
Analysts say the bank will hold off cutting its key refinancing rate any further from its current 0.75 percent when the bank's 22-member governing council gathers at its headquarters in Frankfurt. The council sets monetary policy for the eurozone and its 333 million people.It is also unlikely that the ECB will offer any major new emergency measures, after Draghi made the risky but crucial step in September of saying the bank could buy unlimited amounts of government bonds and lower borrowing costs for those governments, such as Spain and Italy, that are struggling to finance their debts. Eurozone financial markets have calmed since ECB made its offer, though it has yet to buy a single bond under it. The ECB would only do so if a country asks for the help and agrees to take steps to reduce its deficit. Even so, the bond offer and calmer markets have so far removed the threat of a government might be forced to default on its debts. But it will take more than that to get the wider economy moving again. The eurozone shrank 0.1 percent in the third quarter, and is likely to shrink again in the last three months of the year. Meanwhile, the ECB is expected to cut its forecast for next year from 0.5 percent to near zero, in line with the forecast for 0.1 percent growth from the EU's executive commission.
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