ECB holds out chance of more stimulus at March meeting

FRANKFURT, Germany (AP) — European Central Bank head Mario Draghi let rattled investors know that the bank is poised to take action as soon as its next meeting in March if plunging oil prices and market turmoil threaten the economy.

At its March 10 meeting, however, the bank that sets monetary policy for the 19 nations that use the shared euro currency will have a new set of staff estimates about the future course of inflation.

"What was expected to be a dull first meeting of the year turned out to be an exciting ECB meeting, with ECB president Mario Draghi opening the door widely for new ECB action in March," wrote analyst Carsten Brzeski at ING-DiBa.

Because communication is a two-way affair.

At the Dec. 3 meeting, the ECB governing council expanded an existing stimulus program based on 60 billion ($66 billion) in monthly purchases of government and low-risk private sector bonds by extending the purchases for another six months through March 2017.

The purchases are made with newly-created money, so they increase the amount of money in the financial system and in theory should boost inflation and also lending to support business.

"With new downside risks to economic growth and a significant drop in oil prices depressing the near-term outlook for inflation, chances have risen that the council may then agree to an additional stimulus," Schmieding added.