ECB buys covered bonds for first time

The European Central Bank has bought covered bonds for the first time since president Mario Draghi unveiled an asset purchase programme last month.

The ECB acquired short-dated French notes from Société Générale and BNP Paribas, as well as Spanish securities from other lenders, said two sources. Draghi said he intends to expand the bank’s balance sheet by as much as €1tn to stave off deflation in the eurozone.

Policymakers are under pressure to take action as eurozone inflation slowed to 0.3% in September and the IMF said the region has as much as a 40% chance of entering its third recession since 2008. Growth will reach 1.3% next year, slower than the 1.5% pace predicted in July, after a 0.8% gain this year, the IMF said earlier this month.