MercoPress. South Atlantic News Agency

ECB steps up plans for more stimulus measures to revitalize Euro-economy

ECB staff “have stepped up the technical preparations for further measures, which could, if needed, be implemented in a timely manner,” said Draghi

The European Central Bank (ECB) has “stepped up” plans for more stimulus measures aimed at revitalizing the Euro-zone economy, bank president Mario Draghi said on Thursday. His comments came after the ECB held interest rates at 0.05%.

 Mr Draghi added the bank would assess the impact of its current stimulus measures early next year. He also gave his strongest indication yet that the ECB was willing to buy government debt.

ECB staff “have stepped up the technical preparations for further measures, which could, if needed, be implemented in a timely manner,” he said.

The ECB has so far resisted pressure to follow in the footsteps of central banks in the UK, UK and Japan by stimulating the Euro zone economy through the purchase of government bonds.

In part this has been because of opposition from Germany, which has argued that asset purchases of this type are outside of the ECB's remit. However, Draghi said it would be “illegal” for the ECB not to pursue its mandate to control inflation.

Draghi said the bank's Governing Council, the equivalent of the Federal Reserve Open Markets Committee, remained “unanimous in its commitment to using additional unconventional instruments within its mandate”.

He added: “This would imply altering early next year the size, pace and composition of our measures.”

Falling inflation and low economic growth have been persistent problems in the Euro zone for most of this year. In September, the bank announced it would buy covered bonds and other assets for two years in an effort to stimulate the Euro zone economy. Covered bonds are those backed by public sector loans or mortgages.

Latest figures show the Euro zone grew by 0.2% in the third quarter of the year, and the rate of inflation fell back to 0.3% in November from 0.4% the previous month.

The Organization for Economic Co-operation and Development (OECD) has warned the Euro area may be stuck in persistent stagnation.

Draghi admitted inflation was likely to stay low for a prolonged period of time and that lower oil prices were likely to lead the inflation rate lower.

The ECB's own estimate of economic growth was also revised down substantially to 0.8% this year, bringing it in line with an earlier European Commission forecast. The bank forecast the Euro-zone economy would grow by 1% in 2015 and 1.5% in 2016.