The European Central Bank will do what it must to ensure that inflation returns quickly towards the goal of just under 2 per cent, central bank president Mario Draghi says.
Speaking at the European Banking Congress in Frankfurt today, Draghi said: “If we decide that the current trajectory of our policy is not sufficient to achieve that objective, we will do what we must to raise inflation as quickly as possible.
“In making our assessment of the risks to price stability, we will not ignore the fact that inflation has already been low for some time.”
In the Eurozone the annual inflation rate is 0.1 per cent but it risks slipping further because of scarce global growth and falling oil prices.
The recovery in the path of growth in Europe “has not yet been mirrored in the path of inflation”, Draghi says, remaining well below the central bank’s objective of below but close to 2 per cent.
Draghi adds: “If we conclude that the balance of risks to our medium-term price stability objective is skewed to the downside, we will act by using all the instruments available within our mandate.
“In particular, we consider the asset-purchase program to be a powerful and flexible instrument, as it can be adjusted in terms of size, composition or duration to achieve a more expansionary policy stance.”
In the latest ECB meeting, Draghi had already sent hints of a further expansion to the €1.1trn quantitative easing program possibly due in December.