The ECB Governing Council unanimously decided to maintain the main interest rate at 0.75% at their first monetary policy meeting of 2013. ECB head Mario Draghi revealed a more positive outlook on the European crisis during the press conference following the interest rate announcement.
The president suggested that inflation should decline below 2% during 2013. He said that economic weakness in the Eurozone will extend into the new year but that it should give way to a recovery later in the year, as confidence in financial markets is improving gradually and bond yields are seen falling considerably. Credit conditions, already satisfactory, should continue improving as well, as the two long term refinancing operations helped stave off disorderly delevering.
Mario Draghi stressed the importance of a rapid implementation of structural reforms by Eurozone governments in order to increase competitiveness in the area. This should boost growth potential and lead to a rise in employment.
The ECB head also pointed out the necessity of establishing an integrated financial framework in the Eurozone of which the “single supervisory mechanism (SSM) is one of the main building blocks.”
Jamie Coleman from Forex Live comments on ECB's lack of action this month: “Draghi did the euro a lot of good in the near-term by taking a rate cut off the table. But in the bigger picture he's done the ECB a disservice by leading the market to expect a rate cut at the December meeting only to change tack nearly 180 degrees at the following meeting. Central bankers are not supposed to react to each and every blip in sentiment and it appears that Draghi is doing just that.”
Greek jobless rate climbs unrelentingly
According to data released by Greek the National Statistics Service on Thursday, the country's unemployment rate rose to a new record high of 26.8% in October, following 26.2% in September. Unemployment among young people hit 56.6%.
At present Greece is the country with the highest jobless rate in the Eurozone, followed by Spain where it reached 26.6% in November.
Strong demand at Spanish debt auction
The Spanish Tesoro Público held its first debt auction in 2013 on Thursday, during which it sold a total of 5.87 billion euro worth of bonds, exceeding the maximum target of 4-5 billion euros.
3.397 billion euros of bonds maturing in March 2015 were auctioned at an average yield of 2.476%, compared with 3.282% % seen at the previous auction. 1.950 billion euros worth of bonds maturing in January 2018, were sold at an average yield of 3.988% versus the previous 4.68%. Bonds maturing in July 2026 yielded 5.555%.