The European Central Bank (ECB) kept interest rates unchanged on Thursday, as it waits to judge the impact of radical stimulus measures unveiled in June.
In a press conference following the rate decision, ECB President Mario Draghi said the central bank had "intensified" preparation for an asset-purchase program, and was willing to launch one if the inflation picture changed.
The central bank's inaction comes despite a shock fall in inflation in July, which reignited concerns that the region could be heading for a period of growth-sapping deflation.
Inflation rose by 0.4 percent compared to the same period last year, failing to match expectations of 0.5 percent. It was the lowest level seen since October 2009 and below last month's reading of 0.5 percent.
But Draghi appeared unperturbed by this slide. "We haven't observed any decline on the medium to long-term (inflation) expectations. Long-term expectations remain anchored at 2 percent, other expectations remained anchored at the previous levels," he said at the press conference.
The ECB unveiled a raft of stimulus measures at its June meeting, in an effort to boost the euro zone's struggling recovery. Its governing council is widely expected to hold off from further policy action until these interest rate cuts and a new loan program – dubbed the TLTRO, due to start to September - take effect.
Draghi said he expected a "sizable" take up of the TLTROs, of between 450-850 billion euros ($600-1140 billion).
Also in June, Draghi said the ECB had undertaken "preparatory work" in order to follow the lead of the U.S.Federal Reserve and Bank of England and launch its own bond-buying program by purchasing asset-backed securities (ABS) from banks.
On Thursday, he expanded on this, saying the central bank was prepared to resort to such measures if needed.
"We have intensified preparatory work related to outright purchases in the asset-backed securities market to enhance the functioning of the monetary policy transmission mechanism," he said at the press conference.
He added that the central bank's Governing Council was "unanimous" in its commitment to "unconventional measures like ABS purchases, like QE, if our medium-term outlook for inflation were to change."