Alex Domanski/DAPD, via Associated Press
Mario Draghi, head of the European Central Bank, at a news conference on Thursday, where he said rates would be unchanged.
FRANKFURT — Acknowledging that the economy is likely to remain weak well into next year, the European Central Bank sharply reduced its growth forecast for the euro zone Thursday, and left its main interest rate unchanged at a record low of 0.75 percent.
Meanwhile the central bank in Britain, which does not use the euro, also decided to hold its benchmark interest rate at a record low, amid indicators that the outlook for the British economy was dimming, largely because of troubles in the euro zone. The Bank of England kept the rate at 0.5 percent.
Mario Draghi, the E.C.B. president, cited economic uncertainty for the 17 euro zone countries in scaling back the bank’s prediction outlook for 2013. Compared with a previous growth forecast of 0.5 percent of growth in gross domestic product for the currency bloc, he said growth at best was unlikely to exceed 0.3 percent. And the euro zone economy could even end up shrinking 0.9 percent next year, he said.
Among the risks that could hamper future growth, Mr. Draghi listed “uncertainties about the resolution of sovereign debt and governance issues in the euro area, geopolitical issues and fiscal policy decisions in the United States.”
Yet he left room for the prospect of a return to more positive figures later next year, citing recent indicators showing increased business confidence in France, Germany and Italy.
In London on Thursday, the Bank of England not only held interest rates steady, but signaled no change in its economic stimulus program, which has called for purchasing £375 billion, or some $600 billion, in government bonds to pump more money into the economy.
The government had said Wednesday that it would take a year longer to bring Britain’s budget deficit under control because the economic recovery had slowed, mainly because of troubles in the euro zone.
The Bank of England is evaluating its options to fuel the British economy, which is again running out of steam after emerging from a double-dip recession earlier this year.
Apart from its bond-buying stimulus program, known as quantitative easing, the central bank has also been helping banks access capital more cheaply to be able to lend more. Some economists said more stimulus might be needed to bring back more stable growth and allow the government to meet its debt reduction target.
“Given that economic data has weakened if anything over the last month or so, further quantitative easing remains in the cards,” said Victoria Clarke, an economist at Investec in London.
The British economy is likely to shrink 0.1 percent this year before expanding 1.2 percent next year, according to the Office for Budget Responsibility, an independent agency. That compares with 0.8 percent growth predicted for this year in March and a 2 percent expansion for next year.
Some economists expect the Bank of England to restart its bond purchasing program early next year as a way to inject more money into the economy.
For the E.C.B., in a year where it has cut its rates to a record low, introduced a €1 trillion, or a $1.3 trillion, program of lending to banks and announced its willingness to purchase bonds from heavily indebted countries within the euro zone, the decision to leave the benchmark interest rate untouched seemed to reflect an eagerness to shift some of the burden of responsibility back to governments.
Mr. Draghi called it “essential” that countries continue restructuring their financial sectors and reduce their amount of public debt, but refrained from indicating that any further programs were in the offing to help ease the crisis, now entering its third year.
The E.C.B.’s benchmark rate has lost much of its power to influence market rates in troubled corners of the euro zone. Credit remains expensive in countries like Portugal and Italy because of lingering fear among lenders that the euro zone could splinter.
“There were no clear hints on unconventional measures of credit easing,” wrote Elga Bartsch, a researcher with Morgan Stanley, in a note to investors. “In fact, when asked about additional measures the E.C.B. could take, Mr. Draghi rattled through what the E.C.B. has done in the past and the positive impact that these measures have had.”
European Central Bank Cuts Growth Forecast
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European Central Bank Cuts Growth Forecast
