More of the same from Draghi in 2013?

European Central Bank President Mario Draghi will turn his attention to nursing the euro region back to economic health this week as the urgency to deploy crisis measures recedes after three years.

Draghi’s Governing Council, which sits for its first session this year on Jan. 10, will seek to extend the calm it’s instilled on markets with last year’s pledge to do anything in its power to end the crisis, economists said. While policy makers will likely keep interest rates unchanged for now, the threat of unlimited bond purchases has bought time to focus more on ending the region’s looming recession.

“Draghi’s threat is working,” Tobias Blattner, an economist at Daiwa Capital markets in London, said in an interview. “Foreign investors are gradually coming back and Spain can live with the current yield levels,” he said, referring to a 10-month low in Spanish borrowing costs.

Draghi and European policy makers are returning to work with the turmoil that has ravaged the region’s bond markets at bay. Even so, they face potential pitfalls arising from widening debt in Spain, next month’s election in Italy and continuing austerity in Greece.

Via – Bloomberg

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