Mario Draghi primed investors for an initial bond-buying salvoon Monday as he signaled European Central Bank (ECB) officials areconvinced they will succeed in choking off the threat ofdeflation.

Six years after the U.S. Federal Reserve began quantitativeeasing (QE), the ECB's Governing Council committed to its firstasset purchases next week in a program amounting to 60 billioneuros (US$66 billion) a month. The ECB president also unveiledforecasts showing higher economic growth with an inflation outlookthat puts officials on track to reach a goal of just below 2percent.

“Our monetary policy decisions have worked, and it is with acertain degree of satisfaction that the Governing Council hasacknowledged this,” he said at a press conference in the Cypriotcapital of Nicosia on Thursday. “We see objectives are graduallybeing obtained.”

Draghi's push to lead the 19-nation currency bloc into a newmonetary-policy era by embarking on QE added to a range of priorstimulus measures that had so far failed to raise consumer pricesin the region. Since June, the central bank has cut interest ratestwice, offered cheap long-term loans for banks, and started buyingasset-backed securities and covered bonds.

In his comments to journalists, Draghi revealed a range ofelements of his stimulus plan, including to what extent the ECB maybuy government bonds with negative yields.

“How negative can we go? Until the deposit rate,” he said.Policy makers left that rate at minus 0.2 percent on Thursday, withthe benchmark rate at 0.05 percent.

Euro-area government bonds rallied after that remark. Portuguese10-year securities jumped, pushing yields toward a record low,while Spanish, Italian, and German 10-year bonds also rose. Germantwo-year notes declined, pushing their yield above the deposit ratefor the first time since Feb. 6.

The Frankfurt-based institution now predicts consumer priceswill stagnate this year before increasing 1.5 percent next year and1.8 percent in 2017, Draghi said. Officials revised projections foreconomic growth, partly due to a drop in oil prices. The ECB seesgross domestic product expanding 1.5 percent this year, 1.9 percentin 2016, and 2.1 percent in 2017.

“Overall, the projections and the broader assessment of theeconomy are a signal of little inclination to add morestimulus,” Ken Wattret, an economist at BNP Paribas SA in London,said in a note to clients.

Diminishing Risks

While reiterating that the “risks surrounding the economicoutlook for the euro area remain on the downside,” Draghi also saidthey “have diminished following recent monetary policydecisions.”

Draghi's satisfaction with an improvement of the economy followshis victory in pushing through government-bond purchases againstthe will of other policy makers such as Bundesbank President JensWeidmann and Germany's Executive Board member SabineLautenschlaeger.

The new ECB projections reflect “the favorable impact of loweroil prices, the weaker effective exchange rate of the euro, and theimpact of the ECB's recent monetary policy measure,” Draghi said,signaling that this was now the ECB's last stimulus action and animprovement of the economic situation now depends on otheractors.

Buying assets on a broad-based level was the “final set ofmeasures,” the ECB President said. “In order to increaseinvestment, boost job creation, and raise productivity, both thedecisive implementation of product and labor market reforms andactions to improve the business environment for firms need to gainmomentum in several countries.”

–With assistance from Zoe Schneeweiss, Catherine Bosley, JanaRandow, Alessandro Speciale and Angela Cullen in Frankfurt, ScottHamilton and Jennifer Ryan in London and Jeff Black in Nicosia.

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