The European Central Bank will buy assets for at least two years to boost inflation and economic growth in the eurozone.
The central bank will start buying covered bonds this month and asset-backed securities by the end of the year, ECB President Mario Draghi said Thursday at a news conference, after leaving interest rates unchanged at record lows. “These purchases will have a sizable impact on the balance sheet,” Mr. Draghi said, without specifying a volume.
While Mr. Draghi reiterated that the measures will help steer the ECB's balance sheet back to levels seen at the start of 2012, an increase of as much as €1 trillion ($1.3 trillion) in assets, he also said the size of the balance sheet is an instrument rather than a goal. Since June, officials have cut interest rates twice and announced a range of measures such as loans to banks aimed at boosting credit to the real economy.
Policymakers are unanimous in embarking on further policy measures if necessary, Mr. Draghi said.
The ECB will buy assets in some nations that have a debt rating below BBB-, he said. Caveats will be included so purchases in countries with a rating below that threshold will be equivalent in risk to assets bought elsewhere.
“We want to be as inclusive as possible but with prudence,” Mr. Draghi said.
Inflation slowed to 0.3% last month, the least in almost five years, and the central bank's preferred measure of medium-term inflation expectations has extended its decline. Economic growth in the currency bloc came to a halt in the second quarter, increasing the risk that the eurozone will fall into recession for the third time since 2008.
The ECB's 24-member Governing Council left its benchmark interest rate at 0.05% Thursday.