European Central Bank President Mario Draghi said the economicoutlook is worsening and the bank stands ready to activate itsbond-purchase program if governments fulfil the necessaryconditions.

“We are ready to undertake” Outright Monetary Transactions,“which will help to avoid extreme scenarios,” Draghi said today ata press conference in Frankfurt after policy makers left thebenchmark interest rate at a historic low of 0.75 percent. “Therisks surrounding the economic outlook remain on the downside” andunderlying inflation pressures “should remain moderate,” hesaid.

Draghi yesterday fueled speculation that the ECB might put ratereductions back on the agenda, saying the debt crisis is startingto hurt Germany — the pillar of economic strength in the euro area— and that inflation risks are “very low.” Still, Spain isresisting asking for a bailout that would open the door to ECB bondpurchases, stalling the central bank's efforts to repair itsmonetary policy transmission mechanism.