(MENAFN- Khaleej Times) European Central Bank (ECB) President Mario Draghi threw the door wide open on Friday for more dramatic action to rescue the eurozone economy, saying "excessively low" inflation had to be raised quickly by whatever means necessary.
Draghi said there was now no sign of economic improvement in the months ahead and that the ECB would expand and step up its programme to pump more money into the currency bloc if its current measures fell short of lifting inflation.
"We will continue to meet our responsibility - we will do what we must to raise inflation and inflation expectations as fast as possible, as our price stability mandate requires of us," Draghi said in a speech at an annual banking congress.
"If on its current trajectory our policy is not effective enough to achieve this, or further risks to the inflation outlook materialise, we would step up the pressure and broaden even more the channels through which we intervene, by altering accordingly the size, pace and composition of our purchases."
"Draghi all but announced that the central bank will step up monetary easing soon. Mr Maybe has become Mr Definitely," said Nick Kounis, an economist with ABN Amro. "We think the ECB would exhaust other alternatives before moving to sovereign QE."
Draghi had said on Monday further measures could involve large-scale purchases of government bonds, also known as quantitative easing - a step that is particularly opposed in the bloc's largest economy, Germany, for fear of mutualising risks.
The head of Germany's powerful Bundesbank, Jens Weidmann, in his speech at the same event, avoided the subject of monetary policy and instead spoke about banking regulation.
"We can't be constantly commenting on one another," Weidmann told reporters as he left the event shortly after his speech.
Draghi's comments pushed 10-year government bond yields in Italy, Ireland and Austria to new all-time lows. The euro fell 0.8 per cent against the dollar and was down 1.1 per cent against the yen.
Draghi's remarks were almost as dramatic as his "whatever it takes" speech in the summer of 2012 with which he pulled the eurozone back from the brink.
Having earlier in the week pointed to early signs of improvements, Draghi on Friday said the economic situation remained difficult and the latest business survey suggested a stronger recovery was unlikely in the coming months.
Legal Disclaimer:
MENAFN provides the information “as is” without warranty of any kind. We do not accept any responsibility or liability for the accuracy, content, images, videos, licenses, completeness, legality, or reliability of the information contained in this article. If you have any complaints or copyright issues related to this article, kindly contact the provider above.