• Inflation should remain in-line with price stability
• Inflation expectations firmly anchored
• Economic weakness in EZ expected to extend into next year
• Should recover in 2013
• Main refinancing operations (MRO) at full allotment on fixed rates until at least July(Unlimited borrowing for banks)
• Indicators point toward further weakness in Q4 though some have stabilized
• Gradual recovery later in 2013
• Cuts GDP forecasts
• ECB forecasts GDP to contract between 0.4 and 0.6% this year
• Sees GDP between +0.3% and -0.9% next year; Was at -0.4% and +1.4%
• Price stability risks broadly balanced
• 2013 inflation forecast 1.1% to 2.1%
• Loan demand weakness due to weak GDP outlook, risk aversion balance sheet adjustment