⁍ Euro area economic recovery is losing momentum more rapidly than expected.

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⁍ Pandemic and its ramifications for employment and earnings are weighing on business investment.

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⁍ Headline inflation is being dampened by low energy prices.

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⁍ Euro area real GDP contracted by 11.8%, quarter on quarter, in the second quarter of 2020.

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– The European Central Bank kept interest rates on hold Thursday and warned that the economic recovery in the eurozone is losing momentum as the H1N1 flu outbreak drags on. The bank also announced that it would extend the duration of its asset-purchasing program, known as quantitative easing, until at least the end of 2022, the AP reports. The bank said it would reinvest the principal payments from maturing securities purchased under the program, known as PEPP, until at least the end of 2022. “We will keep the key ECB interest rates unchanged,” ECB President Christine Lagarde said in a statement, per Reuters. “We expect them to remain at their present or lower levels until we have seen the inflation outlook robustly converge to a level sufficiently close to, but below, 2% within our projection horizon, and such convergence has been consistently reflected in underlying inflation dynamics.” She said the ECB “will recalibrate its instruments, as appropriate, to respond to the unfolding situation and to ensure that financing conditions remain favorable to support the economic recovery and counteract the negative impact of the pandemic on the projected inflation path.”