European Economy’s respite from Crisis gives ECB room to pause rate cuts

The European economy may be winning some respite from its sovereign debt crisis. With the Euro area teetering on the brink of a second recession in three years, data this week showed rebounds in German exports and French business confidence, suggesting the slowdown may be limited. The Euro’s 10 percent drop against the dollar since late October and an easing of financial conditions may also provide support as leaders fight to restore investor faith in their region’s bond markets. The signs of resilience hand European Central Bank President Mario Draghi room to keep the benchmark interest rate at 1 percent today after cutting it twice in the past two months and flooding the banking system with a record amount of cash. The pause may be brief if looming budget cuts and a credit shortage prove too powerful for the economy to withstand. Officials meeting in Frankfurt will announce their decision at 1:45 p.m. and Draghi will explain it to reporters 45 minutes later.