FRANKFURT—European Central Bank President Mario Draghi reasserted the ECB's readiness to expand its bond purchase program and perhaps enact other measures to combat weak inflation in the eurozone.
Mr. Draghi also said in remarks at the European Parliament in Brussels that the ECB's asset purchase program "is considered to be a particularly powerful and flexible instrument."
He stressed subdued inflationary pressure and said that economic weakness is still weighing on wage growth "and this could moderate price pressures as we move forward."
"From today's perspective, this suggests that a sustained normalization of inflation could take longer than we anticipated in March when we first appraised the overall impact of our measures," he said.
The central banker said that the ECB would "closely monitor the risks to price stability and thoroughly assess the strength and persistence of the factors that are slowing the return of inflation" to the ECB's medium-term target of just below 2%. He repeated that at the central bank's next monetary policy meeting in early December it would "re-examine the degree of monetary policy accommodation."
Many economists view this as a signal that the central bank is seriously considering expanding the volume and length of its large-scale asset purchase program, or quantitative easing, beyond the €60 billion ($ 64.54 billion) a month that the ECB started buying in March of this year and has said it would continue to buy until at least September of next year.
"If we were to conclude that our medium-term price stability objective is at risk, we would act by using all the instruments available within our mandate to ensure that an appropriate degree of monetary accommodation is maintained," he said.
Economists said that Mr. Draghi's comments provide a further signal that the ECB will likely announce new moves at its coming news conference on Dec. 3. "Draghi's comments on risks to growth and inflation suggest even a bit more clearly than the last news conference that the ECB will likely act in December," said Berenberg chief economist Holger Schmieding in a research note. "Although the debate at the ECB seems to be far from over, the fact that Draghi is making these comments in a high-profile setting suggest that he is confident that the majority of the ECB council will support him," he said.
Mr. Draghi repeated to parliamentarians that the ECB had no shortage of instruments at its disposal that it could use. "We don't feel that we are short of instruments to pursue our objectives," he said.
He acknowledged that a period of too low interest rates for too long "provides fertile ground for financial stability issues", but reminded that the ECB's main mandate is to achieve an inflation rate in the eurozone that is just below 2% over the medium term. "That's why we have [QE] in place. That's why we monitor closely all developments in the world economy that might postpone the achievement of our inflation target," he said.
The ECB head also took a number of at times heated questions about the ECB's role in Ireland's bailout in 2010. Critics have accused the ECB of acting in a heavy-handed manner during the country's banking crisis and in the run up to its bailout. Mr. Draghi said, however, that "we shouldn't forget that the banking crisis was entirely homemade."
Write to Todd Buell at todd.buell@wsj.com and Brian Blackstone at brian.blackstone@wsj.com
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