The European Central Bank cut its economic and inflation forecasts and President Mario Draghi said weakness will persist into next year, leaving the door ajar for further interest-rate cuts.

“Weak activity is expected to extend into next year,” Draghi said today at a press conference in Frankfurt after policy makers left the benchmark rate at a record low of 0.75 percent. “Later in 2013, economic activity should gradually recover as global demand strengthens and our accommodative monetary-policy stance and significantly improved financial market confidence work their way through to the economy.”

While Italian and Spanish bond yields have plummeted since Draghi promised to do whatever it takes to save the euro and unveiled an unlimited bond-purchase program, the 17-nation currency bloc fell back into recession in the third quarter. The ECB's latest forecasts paint a picture of economic stagnation and inflation falling well below its 2 percent limit. The euro fell more than half a cent to $1.3031 as Draghi spoke.