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Mario Draghi said any stimulus implemented by the European Central Bank could include purchases of government bonds.
The comments in a letter to European Parliament lawmaker Luke Flanagan echo remarks the ECB president made after the Governing Council's last monetary-policy meeting on December 4. ECB staff are preparing a stimulus package for officials to consider at their next meeting on January 22.
"Early this year, the Governing Council will reassess the monetary stimulus achieved through the set of measures implemented in the second half of 2014," Draghi said in the letter dated January 6 and published on the ECB's website on Thursday. "This may imply adjusting the size, pace and composition of the ECB's measures. Such measures may entail the purchase of a variety of assets - one of which could be sovereign bonds."
The ECB is fighting to stave off a deflationary spiral in the euro area after consumer prices fell in December for the first time in more than five years. Even so, policy makers are divided on the need for quantitative easing, with German-led opposition claiming it increases taxpayer risk and undermines the incentive for governments to push through economic reforms.
The euro fell and Italian bonds extended their gain after the letter was published. The single currency traded at $1.178, down 0.5 per cent, at 4:35 pm Frankfurt time.
