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ECB details asset buying programme

ECB details asset buying programme
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The European Central Bank has kept interest rates unchanged at 0.05 percent and given details of its plan to kick start the euro zone’s struggling economy.

President Mario Draghi said the ECB would begin to buy asset-backed securities (ABS) in the fourth quarter of this year.

He hopes the move will spur a market for credit and support lending. He also warned euro zone members to closely watch their budgets.

“As regards fiscal policies, Euro area countries should not unravel the progress already made and should proceed in line with the rules of the Stability and growth pact. This should be reflected in the draft budgetary plans for 2015. The existing flexibility within the rules should allow governments to address the budgetary costs of major structural reforms,” said Draghi.

Draghi also said the ECB council would take further steps, if needed, to stave off deflation. That has been widely interpreted as broad-based quantitative easing.

The ECB’s meeting took place at the former royal palace in Naples. Outside the venue, thousands of people in protest over austerity measures.

One demonstrator urged the bank to change its direction: “They should not keep financing banks because that triggers a system of financing and blackmailing, but instead fund welfare, social services and cooperation.”

Draghi’s ABS plan has also met with opposition from France and Germany, who say there are safer and more secure options to boost the euro zone.