ECB unveils plan to buy unlimited volume of sovereign bonds

"The Governing Council decided on the modalities for undertaking Outright Monetary Transactions (OMT) in secondary markets for sovereign bonds in the euro area," said Mario Draghi, ECB President at a press conference after the meeting in Frankfurt.

The OMT programme, which would replace a previous one called SMP, would cover sovereign bonds issued by debt-ridden Eurozone nations with maturities of up to three years.

The ECB has set no limit to the volume of bonds it will purchase under the new programme, he told reporters at the press conference.

"We aim to preserve the singleness of our monetary policy and to ensure the proper transmission of our policy stance to the real economy throughout the area. OMTs will enable us to address severe distortions in government bond markets which originate from, in particular, unfounded fears on the part of investors of the reversibility of the euro," Draghi said.

In another decision, the ECB left its key interest rate unchanged at 0.75 per cent in the Eurozone countries. "Based on our regular economic and monetary analyses, we decided to keep the key ECB interest rates unchanged," Draghi said.

Prior to keeping its rates unchanged, the ECB has cut its main interest rate three times since November.

Besides, Draghi said inflation rates are expected to remain above 2 per cent throughout 2012 owing to high energy prices and increases in indirect taxes in some euro area countries.