FRANKFURT (AFP) – The European Central Bank does not have many options left apart from sovereign bond purchases to ward off deflation in the euro area, its president Mario Draghi said Wednesday.
“All members of the ECB’s governing council are determined to fulfil our mandate,” Draghi told the weekly newspaper Die Zeit, when asked about his plans to launch a controversial programme of large-scale buying of government bonds known as quantitative easing or “QE”.
“Of course there are differences about how we can do that. But it’s not as if we have an endless amount of possibilities,” he said.
Financial markets are betting that the ECB council will announce plans for a programme of some form of QE when it holds its first policy meeting of the year on January 22.
Other central banks around the world have used QE programmes to kick-start their economies.
But there are critics of such a programme in Europe, notably the Bundesbank or German central bank, which believes QE will take away the pressure on governments to reform their economies and is effectively a licence to print money to get them out of debt.
Draghi’s comments will fuel speculation that such a programme is imminent.
Just on Tuesday, ECB executive board member Benoit Coeure had said discussions about a QE programme were “very far advanced.”
“We had a discussion last week on many of the technical details. We are definitely in a position to make a decision on January 22,” when the ECB’s policy-setting governing council meets next, Coeure said.
“But that does not mean we will actually make a decision,” he added.