ECB President Mario Draghi will turn his attention to nursing the euro region back to economic health this week, as the urgency to deploy crisis measures recedes after three years.
Draghi’s Governing Council, which sits for its first session this year on January 10, will seek to extend the calm it’s instilled on markets with last year’s pledge to do anything in its power to end the crisis, economists said. While policy-makers will likely keep interest rates unchanged for now, the threat of unlimited bond purchases has bought time to focus more on ending the region’s looming recession. Draghi and European policy-makers are returning to work with the turmoil that has ravaged the region’s bond markets at bay. Even so, they face potential pitfalls arising from widening debt in Spain, next month’s election in Italy and continuing austerity in Greece.
For now, the task of the currency union will be to wrest the 17 Member States out of an economic slump. European services and factory output contracted more than initially estimated in December, adding to signs the recession will extend into this year. At the same time, there are some indications of stabilisation in the global economy and in Germany, Europe’s largest economy.
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