Mario Draghi has said purchases of asset backed securities would begin this month as the central banker outlined his plans to support Europe’s ailing economy.
The president of the European Central Bank (ECB) said the institution would begin buying covered bonds in the second half of this month - a programme lasting for two years.
He also said there would be a series of targeted loans which would begin now and run until June 2016 and that the purchases would have a “sizeable impact” on the ECB’s balance sheet.
“The new measures will support specific market segments that play a key role in the financing of the economy,” Mr Draghi said.
“They will thereby further enhance the functioning of the monetary policy transmission mechanism, facilitate credit provision to the broad economy and generate positive spillovers to other markets.”
Mr Draghi added given the “subdued” inflation outlook and “weakening” in euro area growth momentum, the measures should “ease the monetary policy stance more broadly”.
“They should also strengthen our forward guidance on the key ECB interest rates and reinforce the fact that there are significant and increasing differences in the monetary policy cycle between major advanced economies,” he added.
He said the measures would support specific market segments which “play a key role in the financing of the economy”.
“Together with the monetary accommodation already in place, the determined implementation of the new measures will underpin the firm anchoring of medium to long-term inflation expectations, in line with our aim of maintaining inflation rates below, but close to, 2 per cent,” Mr Draghi said.
“As all our measures work their way through to the economy they will contribute to a return of inflation rates to levels closer to our aim.
“Should it become necessary to further address risks of too prolonged a period of low inflation, the Governing Council is unanimous in its commitment to using additional unconventional instruments within its mandate.”
Further details on the bond purchase programme are expected later this afternoon.
