ECB announces historic QE programme worth €1.1trn to stimulate growth in the eurozone

President Mario Draghi said the ECB will purchase bonds worth €60 billion a month The European Central Bank has announced it will purchas...

President Mario Draghi said the ECB will purchase bonds worth €60 billion a month

The European Central Bank has announced it will purchase bonds worth €60 billion (£46 billion) a month. President Mario Draghi said that the quantative easing programme, which will start in March, would last until September 2016.

The stimulus package, worth €1.1 trillion overall, is designed to lower borrowing costs, ease deflation and ultimately lift the flat-lining eurozone economy out of stagnation.

It comes after the eurozone entered dangerous deflationary territory for the first time since 2009 earlier this month, driven by the falling oil price.

The money will include some from existing programmes. Countries under a bailout plan, such as Greece, will be included, but with some additional criteria.

Meanwhile, ECB interest rates are set to remain unchanged.

Speaking during a press conference, Draghi said: "(The Governing Council) decided to launch an expanded asset purchase programme encompassing the existing purchase programmes for asset-backed securities and covered bonds.

"Under this expanded programme the combined monthly purchases of public and private-sector securities will amount to €60 billion. They are intended to be carried out until the end of September 2016 and will in any case be conducted until we see a sustained adjustment in the path of inflation, which is consistent with our aim of achieving inflation rates below but close to 2 per cent over the medium term."

Inflation has been below the ECB's target of "close to 2 per cent" for two years despite numerous efforts to kick-start the economy including a historic move into negative interest rates.

As well as moving rates, the ECB had bought up private sector assets and lent hundreds of billions of euros cheaply to banks to stimulate lending, leaving QE as its last major policy option.

The prospect of dramatic ECB action had already prompted the Swiss central bank to abandon its cap on the franc while Denmark, whose currency is pegged to the euro, was forced to cut interest rates in anticipation of the flood of money. The Danish central bank intervened to weaken the crown ahead of the announcement.