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| Bank of England and E.C.B. Hold Rates Unchanged | Bank of England and E.C.B. Hold Rates Unchanged |
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| FRANKFURT — The president of the European Central Bank expressed satisfaction Thursday with progress toward resolution of the euro zone crisis, applauding “amazing” efforts by members of the currency union to reduce government spending. | FRANKFURT — The president of the European Central Bank expressed satisfaction Thursday with progress toward resolution of the euro zone crisis, applauding “amazing” efforts by members of the currency union to reduce government spending. |
| While pessimistic on the immediate outlook for economic growth on the Continent, Mario Draghi, president of the central bank, pointed to a number of indicators of reduced tension in financial markets, including a return of United States money market funds to the region and successful bond sales by Portugal and Ireland. | While pessimistic on the immediate outlook for economic growth on the Continent, Mario Draghi, president of the central bank, pointed to a number of indicators of reduced tension in financial markets, including a return of United States money market funds to the region and successful bond sales by Portugal and Ireland. |
| “Fiscal consolidation that has taken place all over the euro zone is amazing,” Mr. Draghi said after the bank joined the Bank of England in leaving its main interest rate unchanged. “All this poises the euro area for a recovery that is probably going to be slow, but is also going to be solid.” | “Fiscal consolidation that has taken place all over the euro zone is amazing,” Mr. Draghi said after the bank joined the Bank of England in leaving its main interest rate unchanged. “All this poises the euro area for a recovery that is probably going to be slow, but is also going to be solid.” |
| But Mr. Draghi seemed to leave the door open for a rate cut or other measures to stimulate growth without committing to one. He said that inflation would probably fall below the bank’s target of about 2 percent next year and signaled that next month the central bank was likely to lower its forecasts for euro zone growth. | But Mr. Draghi seemed to leave the door open for a rate cut or other measures to stimulate growth without committing to one. He said that inflation would probably fall below the bank’s target of about 2 percent next year and signaled that next month the central bank was likely to lower its forecasts for euro zone growth. |
| At its regular monthly monetary policy meeting, the central bank’s governing council left its benchmark interest rate at 0.75 percent, a record low. | At its regular monthly monetary policy meeting, the central bank’s governing council left its benchmark interest rate at 0.75 percent, a record low. |
| “As expected, the E.C.B. kept its powder dry,” Carsten Brzeski, an economist at ING Bank, wrote in a note to clients. | “As expected, the E.C.B. kept its powder dry,” Carsten Brzeski, an economist at ING Bank, wrote in a note to clients. |
| The Bank of England also kept its benchmark rate at a record low of 0.5 percent and left its bond-purchasing stimulus program at £375 billion, or $600 billion, after the British economy emerged from a double-dip recession in the third quarter. | The Bank of England also kept its benchmark rate at a record low of 0.5 percent and left its bond-purchasing stimulus program at £375 billion, or $600 billion, after the British economy emerged from a double-dip recession in the third quarter. |
| The economy grew 1 percent in the third quarter, its strongest quarterly growth since the global financial crisis started in 2008. But growth was helped by Olympics ticket sales, and some economists said the outlook was gloomy. | The economy grew 1 percent in the third quarter, its strongest quarterly growth since the global financial crisis started in 2008. But growth was helped by Olympics ticket sales, and some economists said the outlook was gloomy. |
| “The big picture is that it’s going nowhere, really,” said Vicky Redwood, an economist at Capital Economics. “Output is essentially stagnating. It’s a pretty dismal picture.” | “The big picture is that it’s going nowhere, really,” said Vicky Redwood, an economist at Capital Economics. “Output is essentially stagnating. It’s a pretty dismal picture.” |
| Mr. Draghi’s appearance at a news conference Thursday came a bit more than a year after he became E.C.B. president, and he used the occasion for a little self-congratulation. Mr. Draghi said that central bank measures like unlimited, low-cost loans to banks had helped eliminate the risk that some lenders would run out of cash. | Mr. Draghi’s appearance at a news conference Thursday came a bit more than a year after he became E.C.B. president, and he used the occasion for a little self-congratulation. Mr. Draghi said that central bank measures like unlimited, low-cost loans to banks had helped eliminate the risk that some lenders would run out of cash. |
| “Compare the situation today with what it was even a year ago,” he said. “There has been substantial progress.” | “Compare the situation today with what it was even a year ago,” he said. “There has been substantial progress.” |
| He emphasized that the central bank remained ready to buy euro area government bonds to drive down prices and “avoid extreme scenarios.” | He emphasized that the central bank remained ready to buy euro area government bonds to drive down prices and “avoid extreme scenarios.” |
| So far, the mere threat of central bank intervention in bond markets has been enough to reduce Spain’s borrowing costs from dangerous levels. Some analysts have questioned how long the calm can last, but Mr. Draghi refused to put pressure on Spanish leaders to ask for help, which they must do to receive it. | So far, the mere threat of central bank intervention in bond markets has been enough to reduce Spain’s borrowing costs from dangerous levels. Some analysts have questioned how long the calm can last, but Mr. Draghi refused to put pressure on Spanish leaders to ask for help, which they must do to receive it. |
| “We stay fully ready to act,” Mr. Draghi said, adding, “It is entirely up to Spain and the Spanish government to take this decision.” | “We stay fully ready to act,” Mr. Draghi said, adding, “It is entirely up to Spain and the Spanish government to take this decision.” |
| Mr. Draghi offered rare praise for euro area governments, saying they had done more to control spending than Japan or the United States. The Greek Parliament’s approval of a sweeping series of austerity measures on Wednesday “really represents progress, especially if you compare the situation to a few months ago,” he said. | Mr. Draghi offered rare praise for euro area governments, saying they had done more to control spending than Japan or the United States. The Greek Parliament’s approval of a sweeping series of austerity measures on Wednesday “really represents progress, especially if you compare the situation to a few months ago,” he said. |
| At the same time, he said the central bank would not forgive any of the Greek debt that it held as a result of an earlier bond purchasing program. There have been calls for the central bank to write off some of the debt or extend the repayment period to take pressure off Greece, but Mr. Draghi reiterated that any debt forgiveness would violate a ban on the central bank’s financing of governments. | At the same time, he said the central bank would not forgive any of the Greek debt that it held as a result of an earlier bond purchasing program. There have been calls for the central bank to write off some of the debt or extend the repayment period to take pressure off Greece, but Mr. Draghi reiterated that any debt forgiveness would violate a ban on the central bank’s financing of governments. |
| In Britain, recent economic figures show that pressure on households is easing as unemployment and inflation start to fall. But the improvements have not been enough to translate into a marked improvement in consumer confidence. Debenhams and Marks & Spencer are among British retailers that recently gave cautious earnings outlooks. | In Britain, recent economic figures show that pressure on households is easing as unemployment and inflation start to fall. But the improvements have not been enough to translate into a marked improvement in consumer confidence. Debenhams and Marks & Spencer are among British retailers that recently gave cautious earnings outlooks. |
| Prime Minister David Cameron, whose government is pushing ahead with an austerity program that includes welfare cuts and higher taxes, said last month that the economy was healing. But Mervyn King, the governor of the Bank of England, said two days later that it was difficult to know whether some of the recent positive signs would persist and that the recovery was slow and uncertain. | Prime Minister David Cameron, whose government is pushing ahead with an austerity program that includes welfare cuts and higher taxes, said last month that the economy was healing. But Mervyn King, the governor of the Bank of England, said two days later that it was difficult to know whether some of the recent positive signs would persist and that the recovery was slow and uncertain. |
| On Wednesday, the European Commission cut its forecast for Britain’s gross domestic product to a 0.9 percent rise in 2013 from the 1.7 percent increase it had predicted in May, partly because of risks from the euro zone. Even though growth remains weak, Britain is doing better than the euro zone. Germany, considered the growth engine of Europe, reported growth of 0.3 percent in the second quarter. | On Wednesday, the European Commission cut its forecast for Britain’s gross domestic product to a 0.9 percent rise in 2013 from the 1.7 percent increase it had predicted in May, partly because of risks from the euro zone. Even though growth remains weak, Britain is doing better than the euro zone. Germany, considered the growth engine of Europe, reported growth of 0.3 percent in the second quarter. |
| In response to a controversy about a vacancy on the central bank’s executive board, Mr. Draghi conceded that top management at the bank needed to include more women. The governing council, which includes the six-member executive board and the 17 heads of central banks in the euro zone, is entirely male. | In response to a controversy about a vacancy on the central bank’s executive board, Mr. Draghi conceded that top management at the bank needed to include more women. The governing council, which includes the six-member executive board and the 17 heads of central banks in the euro zone, is entirely male. |
| Last month, the European Parliament rejected the nomination of Yves Mersch, head of the central bank in Luxembourg, to the executive board, saying a woman should be named to the post. The vote was not binding on the 17 heads of government in euro zone countries, who must approve candidates for the board by majority vote. | Last month, the European Parliament rejected the nomination of Yves Mersch, head of the central bank in Luxembourg, to the executive board, saying a woman should be named to the post. The vote was not binding on the 17 heads of government in euro zone countries, who must approve candidates for the board by majority vote. |
| “We know we have to improve at management level,” Mr. Draghi said. | “We know we have to improve at management level,” Mr. Draghi said. |
Jack Ewing reported from | Jack Ewing reported from Frankfurt, and Julia Werdigier from London. Lark Turner contributed reporting from London. |