The European Central Bank expects the euro zone economy to remain poor, its President Mario Draghi said after the bank left interest rates unchanged.
"Economic activity in the euro area is expected to remain weak," Draghi told a news conference after the ECB held its main interest rate at 0.75%.
He noted that recent economic surveys did not signal any improvement heading to the end of the year.
German business confidence fell last month to its lowest since 2010 and euro zone manufacturing shrank for the 15th month in a row.
Draghi reiterated the ECB's view that inflation, which eased to an estimated 2.5% in October, would fall below 2% next year. The ECB targets inflation of close to but below 2%.
ECB "by and large done" on helping Greece
The ECB is unlikely to help Greece much further in its bailout because it is prohibited from providing direct aid. "The ECB is by and large done," Mario Draghi said when asked about what the bank could do for Greece.
The euro zone is grappling to find a formula to make Greek debt sustainable, with Germany and the International Monetary Fund at odds over the need for governments and the ECB to take a "haircut" on Greek bonds they hold to make the numbers add up.
The ECB has refused to take such a hit on its Greek bonds, saying this would be "monetary financing" which it is prohibited from doing. The bank agreed earlier this year to hand over via governments any profits on its Greek bonds made during Greece's 3-year bailout package - an amount that would add up to roughly €5 billion.
But there remains the possibility of handing over profits beyond that timeframe as well in a similar fashion. The total stands at around €12-15 billion and would be passed to national central banks, which in turn will pass it to their governments. They can then pass it to Athens.
"It's up to the governments to decide whether they want to use these profits for Greece," he said.
Earlier, the ECB deferring any cut in borrowing costs while it assesses the extent of the euro zone's economic downturn and waits for a cue to use its new bond-purchase programme.
The bank has said it was ready to buy bonds of debt-strained governments such as Spain and Italy once they had signed up to a European bailout programme. So far no request has been made, but the announcement alone has calmed markets.
A Reuters poll had given an 80% chance the ECB would hold its main refinancing rate, but most of the 73 analysts polled expected it will be cut to a new record low of 0.5% within the next few months.
Gloomy data this week indicated the euro zone economy may shrink in the fourth quarter, which the ECB could eventually respond to by cutting rates. Draghi himself gave a notably downbeat assessment of the economy yesterday.
"Unemployment is deplorably high," he said in a speech to German bankers. "Overall economic activity is weak and it is expected to remain weak in the near term. And the growth of money and credit are subdued."
Before making any decision to cut rates further, the ECB will focus on making sure that its record low rates reach companies and households across the euro zone, a mechanism that has been broken by the debt crisis.
ECB waits to see effects of OMT
The new bond-purchase plan - dubbed Outright Monetary Transactions (OMT) - is the ECB's designated tool but it can only be activated once a euro zone government requests help from the bloc's rescue fund.
Investors and euro zone policymakers have been urging Spain to seek aid but Spanish Prime Minister Mariano Rajoy has so far avoided seeking help, saying he wants assurances ECB intervention would bring down Spain's debt costs.
Spain sold €4.8 billion of debt including its first longer-term issue in 18 months today, enough to complete its 2012 financing programme and begin raising funds for next year, so there is little immediate pressure on that front.
Yields on Spanish government bonds have dropped by around 2 percentage points since Draghi said in late July the ECB was ready to do "whatever it takes to preserve the euro" - a pledge that heralded the bond-buy plan. Some economists have now raised the possibility that the OMT might never have to be activated considering its impact so far.
The European Commission said in its autumn forecasts yesterday that Spain would suffer a recession almost three times deeper at 1.4% in 2013 than the 0.5% contraction predicted by Madrid, and said it would miss its deficit targets too.
The Commission also said the euro zone economy would barely grow next year, but pick up in 2014.
Meanwhile, the Bank of England maintained UK interest rates at a record low of 0.5% and held its quantitative easing programme at £375 billion earlier today.
ECB to introduce new €5 note next year
The ECB is to introduce a new design for the five euro note. The new design will be revealed to the public in January, and the new notes will enter circulation in May. Old €5 notes will continue in circulation, the ECB said.
The ECB said it would introduce three new security features for the new note - a colour-changing number signifying the notes value, a new hologram and a new watermark. Both of these will feature a portrait of Europa, a figure from Greek mythology.
