The European Central Bank (ECB) left interest rates unchanged while highlighting the positive impact of previous measures. The money from the ultra-cheap three-year loans it offered in December was impacting the economy by easing the credit crunch, the Bank added while concluding its monthly policy meeting.

China’s inflation rate slowed to 4.1% in December, raising hopes of a pro-growth shift in monetary policy. China’s GDP growth is likely to slow sharply to 7.5% in Q1 2012 as exports shrink in the backdrop of the global economic slowdown.

France may not be downgraded in 2012, unless the Euro crisis escalates, Ed Parker, head of EMEA sovereign ratings at Fitch Ratings, said in an interview. He added that Austria could also be spared a rating cut. The country’s exposure to more stable and growing economies in eastern Europe (namely, the Czech Republic, Slovakia and Poland) offset the risks associated with its exposure to the recently-downgraded Hungary.

Growth in China’s trade slowed in December. Exports increased 13.4% y-o-y compared to 13.8% in November. Imports grew 11.8%, the slowest in 26 months, defying expectations of 17.0%. The slower pace of growth could encourage the central bank to ease monetary policy.

New loans by Chinese banks increased 14% in November and broad M2 money supply expanded 13.6% y-o-y in December (+12.7% y-o-y in November), indicating that the Chinese central bank is easing policy measures to reduce the impact of a global slowdown on China’s economy.