The European Central Bank is ready to use further unconventional policy tools if needed to stave off the risk of inflation remaining too low for too long, ECB President Mario Draghi said on Thursday.
Eurozone inflation slowed to 0.3 percent in September, slipping deeper below the ECB’s target of just under 2 percent over the medium term. The persistently low rate underscores the difficulty of hitting that target in a stagnating economy.
The ECB has launched a series of policies to boost the economy and inflation but Draghi said there was a willingness to do more if necessary.
“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,» Draghi told his monthly news conference after the ECB left rates at record lows.
The ECB was meeting in Italy.
Lower-than-expected demand last month for the ECB’s first offering of new long-term loans to banks, part of a stimulus plan aimed increasing lending to companies within the bloc, has raised expectations the ECB will eventually have to undertake asset purchases with new money – so-called quantitative easing. [Reuters]