Mario Draghi has said that any stimulus implemented by the ECB could include purchases of government bonds.
The comments in a letter to Irish MEP Luke ‘Ming’ Flanagan echo remarks the ECB president made after the Governing Council’s last monetary-policy meeting on December 4. ECB staff are preparing a stimulus package for officials to consider at their January 22.
“Early this year, the Governing Council will reassess the monetary stimulus achieved through the set of measures implemented in the second half of 2014,” Mr Draghi said in the letter, dated Tuesday and published on the ECB’s website yesterday. “This may imply adjusting the size, pace and composition of the ECB’s measures. Such measures may entail the purchase of a variety of assets — one of which could be sovereign bonds.”
The ECB is fighting to stave off a deflationary spiral in the eurozone after consumer prices fell in December for the first time in more than five years.
Even so, policymakers are divided on the need for quantitative easing, with German-led opposition claiming it increases taxpayer risk and undermines the incentive for governments to push through economic reforms.
The ECB will meet later this month to decide on what course of action to take. The monthly meeting has been moved from the first thursday of every month to the third. The euro fell to a nine- year low yesterday.