Mario Draghi delivers dovish speech as inflation becomes 'increasingly challenging'

 
Jessica Morris
Follow Jessica
European Central Bank (ECB) governor Mario Draghi delivered a dovish speech today. (Source: Getty)

European Central Bank (ECB) boss Mario Draghi has said the Bank will "do what we must to raise inflation and inflation expectations as fast as possible" across the eurozone, hinting a new round of monetary stimulus is on its way.

At a conference in Frankfurt, Draghi suggested that if current policies fail to work, then the bank will step up the pressure and broaden the channels through which it intervenes.

In the speech, Draghi focused on the threat posed by deflation in ailing eurozone economies, and warned that conditions had become "increasingly challenging". At 0.4 per cent for October, inflation remains well below the central bank's target of close to two per cent.

European Central Bank governor Mario Draghi said:

We will continue to meet our responsibility - we will do what we must to raise inflation and inflation expectations as fast as possible, as our price stability mandate requires of us

If on its current trajectory our policy is not effective enough to achieve this, or further risks to the inflation outlook materialise, we would step up the pressure and broaden even more the channels through which we intervene, by altering accordingly the size, pace and composition of our purchases

The European Central Bank has unleashed a number of measures to try and jolt the flagging single currency bloc into growth. In September it slashed the main interest rate to 0.05 per cent and cut the deposit rate to minus 0.2 per cent. It has also tried boost lending to businesses by buying up private sector loans.

Related articles