The European Central Bank cut its economic and inflationforecasts and President Mario Draghi said weakness will persistinto next year, leaving the door ajar for further interest-ratecuts.

“Weak activity is expected to extend into next year,” Draghisaid today at a press conference in Frankfurt after policy makersleft the benchmark rate at a record low of 0.75 percent. “Later in2013, economic activity should gradually recover as global demandstrengthens and our accommodative monetary-policy stance andsignificantly improved financial market confidence work their waythrough to the economy.”

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