Europeans cut growth outlook, rates unchanged

• European Central Bank leaves key rate at record low 0.75%
• Bank of England leaves key rate at 0.5%
• Forecast for economic growth in 2013 is flat for Europe

FRANKFURT, Germany (AP) — The European Central Bank and Bank of England have left key interest rates unchanged.

At his news conference, ECB President Mario Draghi said the bank has cut its growth outlook for next year — but expects a gradual recovery should take hold by the end of 2013.

The bank now sees the economy shrinking 0.3% in the 17 European Union countries that use the euro. That's the midpoint of the forecast range for minus 0.9% and plus 0.3%.

Previously the bank projected growth of 0.5%.

The ECB left its key rate at a record low 0.75%.

The bank decided against further stimulus even though the economy of the 17 European Union countries that use the euro is in recession.

The bank has already taken measures to calm the crisis over too much government debt in some countries. An offer to buy indebted countries' bonds has lowered borrowing costs for Spain and Italy, and reduced the threat of a eurozone breakup.

Rates are already low and some analysts question how much good further cuts would do.

The Bank of England likewise left its base interest rate unchanged Thursday and did not authorize any additional stimulus measures, a decision which was widely expected by the market.

The announcement by the Monetary Policy Committee left the Bank's key rate at the all-time low of 0.5%, where it has been since March 2009.

The Bank's program of so-called quantitative easing — purchases of government bonds and other high-quality debt meant to boost lending — remains at a total of 375 billion pounds ($604 billion).

The Bank last expanded the quantitative easing program in July, when it raised the total by 50 billion pounds. Expectations of further stimulus measures evaporated after the U.K.'s gross domestic product rose by an unexpectedly strong 1% in the third quarter, ending a nine-month recession.

Some analysts now expect no further stimulus next year.

"Our own view is that the economy will show some signs of life again over the next couple of months and that inflation will climb above 3% early next year, and so we do not expect the (committee) to extend QE in 2013," said Philip Shaw, chief economist at Investec Securities.