During Thursday’s monetary policy meeting, the European Central Bank (ECB) left its benchmark interest rates unchanged. At the press conference after the meeting, ECB president Mario Draghi emphasised that key rates will remain at the current low level for a prolonged period of time.

Draghi vowed to take more steps to ease monetary policy to spark growth in the stagnant economy. He also said that the ECB would strengthen its commitment to re-inflate its balance sheet toward €3 trillion, its crisis-era level.

In the meantime, the European Commission revised downwards its growth forecasts for the eurozone and predicted more low inflation and high unemployment for the currency bloc.

The Commission autumn forecast predicts GDP growth in the eurozone to reach only 0.8 per cent this year. For 2015, it predicted the 18-country bloc would expand by only 1.1 per cent, down from the 1.7 per cent forecasted in last spring’s forecast.

The revised growth figures do not bode well for the southern European countries, where growth is at best anemic and certainly insufficient to bring down double-digit unemployment rates in countries like Spain and Italy. They will also put pressure on the ECB to stimulate growth through a full-blown quantitative easing programme in an effort to halt the decent into an era of no growth and dangerously low inflation.

Finally, US manufacturing grew more than expected in October, recuperating last September’s slowdown and returning to its fastest growth rate in three-and-a-half years, according to an industry report released last week. The Institute for Supply Management (ISM) index of national factory activity leaped to 59 in October from 56.6 the previous month.

This indicates that persistent domestic demand is keeping order books full and allowing US factories to withstand slower global growth. The reading exceeded expectations of 56.1 according to a Bloomberg poll of economists, topping even the most optimistic estimate of 58.6. A reading above 50 indicates expansion in the manufacturing sector.

This article was compiled by Bank of Valletta for general information purposes only.