Speaking at a European banking conference in Frankfurt on Friday, Draghi said the central bank will take all the necessary steps to raise inflation as fast as possible.

“If, on its current trajectory, our policy is not effective enough to achieve this, or further risks to the inflation outlook materialise, we would step up the pressure and broaden even more the channels through which we intervene, by altering accordingly the size, pace, and composition of our purchases,” Draghi said.

Although inflation in the currency union edged up to 0.4 per cent in October, it remains well below the 2 per cent target.

The speech was seen by the markets as a concrete step towards further quantitative easing, and European shares gained ground while the euro fell as a result.

The European currency dropped 0.8 per cent against the US dollar to $1.2434 and 0.7 per cent against sterling to £0.7931.

Germany’s DAX index, which fell on weak economic data yesterday, rebounded 1.8 per centby mid-morning to trade at 9,655.

France’s CAC 40 traded 1.4 per cent higher, while Spain’s Ibex 35 and Italy’s FTSE MIB were up as much as 2.2 per cent and 2 per cent respectively.

The FTSE 100 index was also lifted by the global market resurgence, trading 0.8 per cent up at 6,734.

Draghi’s comments follow a recent warning from Standard & Poor’s about a potential triple-dip recession in Europe.

S&P’s chief European economist Jean-Michel Six said earlier this week the ECB has “one last arrow” to avoid recession, “and that is quantitative easing of €1trn”.