Mario Draghi insisted on Thursday that the European Central Bank agreed on the need to introduce more stimulus if “current measures aren’t enough”, after a meeting at which the bank’s governing council kept interest rates at record lows.
The ECB previously announced that it would begin buying asset-backed securities and covered bonds in a bid to boost lending. The bank has so far not planned large-scale purchases of government debt, as launched by the Bank of England, Federal Reserve and Bank of Japan.
“The governing council [of the ECB] is unanimous in its commitment to using additional unconventional instruments within its mandate” should inflation sink lower or growth fail to take off, the bank said in a statement.
Opposition to outright “monetary financing” of government debts, which German officials believe exceeds the ECB’s mandate, has so far limited Mr Draghi’s room for manoeuvre.
But economists have expressed hope that the ECB could introduce full-blown quantitative easing a later date.
The ECB’s existing purchase programs “are unlikely to do enough to get the [European] economy back on its feet or eliminate the threat of deflation,” said Jennifer McKeown, senior European economist at Capital Economics.
“With the business surveys very weak, bank lending continuing to contract and core inflation at a joint record low, the ECB should be increasingly concerned about the economic and inflation outlook,” she said.
Mr Draghi, the ECB president, also suggested that the bank could lower growth forecasts for the euro zone.
“The risks surrounding the economic outlook for the euro area continue to be on the downside,” Mr Draghi said.
abouyamourn@thenational.ae
Follow The National's Business section on Twitter
