Feankfurt: Mario Draghi warned that the European Central Bank’s newest stimulus push might not be the last as it strives to reach its inflation goal.

If “the outlook becomes less favourable or financial conditions become inconsistent with further inflation progress, the Governing Council intends to increase the program in size or duration,” the ECB president told reporters in Frankfurt after the Governing Council agreed to add 540 billion euros ($576 billion) to its bond-buying program and extend it until the end of next year. “The extension of our purchases over a longer horizon allows for a more sustained market presence and therefore a more lasting transmission.”

While Draghi said new staff economic projections show Euro-area inflation averaging 1.7 per cent in 2019, close to the central bank’s goal of just under 2 per cent, he also reiterated the ECB’s line that the baseline scenario is subject to downside risks. That suggests most officials aren’t yet ready to consider tapering monthly purchases down to zero.

Euro Falls

The euro fell as Draghi spoke, trading down 0.8 per cent at $1.0666 at 2:43pm. Frankfurt time. German 10-year bonds earlier climbed to the highest since January after the ECB announced that it will continue asset purchases after the previous end-date of March 2017, but at 60 billion euros a month instead of the current 80 billion euros.

Most economists surveyed by Bloomberg had predicted the program would be prolonged at the current pace for about six months. The ECB also kept its main refinancing rate unchanged at zero and the deposit rate at minus 0.4 per cent.

The fresh stimulus will take holdings to at least 2.28 trillion euros, or twice as much as was initially envisaged when broad-based QE started in early 2015.

Draghi said the extension will be accompanied by adjustments to the program’s rules, a move necessary to avoid running out of assets to buy. Central banks will be allowed to buy debt with a yield below the deposit rate, previously a minimum eligibility requirement. The minimum duration of debt was lowered to 1 year from 2 years.

Euro-area inflation was 0.6 per cent last month and hasn’t been in line with the ECB’s goal since early 2013, with forecasts repeatedly being lowered.

“There are no signs yet of a convincing upward trend in underlying inflation,” Draghi said. “The Governing Council will closely monitor the evolution of outlook for price stability and if warranted to achieve its objective will act by using all instruments available within its mandate.”