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ECB could ramp up bond purchase programme if necessary: Draghi

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ECB could ramp up bond purchase programme if necessary: Draghi

Mario Draghi - Photo ECB

(FRANKFURT) - The European Central Bank could ramp up its contested bond purchase programme, extending it beyond September 2016 if needed, ECB president Mario Draghi said on Thursday.

Referring to a policy known as quantitative easing or QE, Draghi said at a news conference that "the asset purchase programme provides sufficient flexibility in terms of adjusting the size, composition and duration of the programme".

It was "intended to run until the end of September 2016, or beyond, if necessary," he added.

Fears of deflation -- a dangerous spiral of falling prices -- persuaded the ECB to launch in March the QE programme, under which it plans to purchase 60 billion euros ($68 billion) of sovereign bonds each month until September 2016, or 1.14 trillion euros in all.

Initially the scheme appeared to work, slowly pushing inflation back up in core eurozone economies such as France and Germany.

But euro-area inflation still stood at only 0.2 percent in August, way off the two percent level which the ECB regards as conducive to healthy economic growth. And that target may not be attainable until 2018.

Asked about the modalities of extending the programme, Draghi said it was still too early to say.

"We're not there yet," and the modalities had not been discussed by the governing council at Thursday's meeting, the ECB chief said.

The ECB would assess whether the economic slowdown in China and the decline in oil prices -- both putting a drag on the eurozone economy -- were only transitory or were here to stay, Draghi said.

"Accordingly, the governing council will closely monitor all relevant incoming information. It emphasises its willingness and ability to act, if warranted, by using all the instruments available within its mandate," he said.

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