The European Central Bank (ECB) will begin the new year just as it ended 2012; by keeping the status quo on its rates, while the institution awaits developments in the eurozone. The bank, whose Governing Council will hold its monthly meeting in Frankfurt on 10 January, has maintained its primary intervention rate at 0.75% since July - its lowest ever level.

"While a reduction in rates cannot be completely excluded, we do not think the Governing Council of the ECB will change its interest rates," Michael Schubert, an economist from Commerzbank, told AFP. This point of view is also shared by Howard Archer, an economist with IHS Global Insight. "It seems more likely that the ECB will abstain from lowering its interest rates," he said, although, he added, this does not mean rates will definitely not be lowered "during the first quarter".

However, at the moment greater monetary flexibility seems premature. "Members of the ECB Governing Council have in the last few weeks attempted to calm speculation over a reduction in rates," recalled Schubert. Yves Mersch, new member of the Governing Council, announced his opposition to a reduction in rates in the German press at the end of December, saying that such a move would not be efficient. Indeed, despite very low rates for the last few months, credit remains stuck. Loans to the private sector in the eurozone fell in November for the seventh month in a row.

While the President of the ECB, Mario Draghi, has promised to continue monitoring price stability, the risk of inflation is much less of a preoccupation for the ECB than re-launching the European economy - which was in recession...

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