ECB ready to implement bond-buying plan

BRDO PRI KRANJU, SLOVENIA: European Central Bank President Mario Draghi said on Thursday everything was in place for the bank to buy the bonds of troubled euro zone countries such as Spain and that conditions linked to it need not be punitive.

At the first ECB meeting since Draghi unveiled his controversial bond-purchase plan a month ago, markets were looking for signs of when Spain might make a formal aid request and trigger the programme that some have hailed as a saviour for the battered euro zone.

Draghi offered no clues in that regard, but did say that Spain had made "significant progress" in addressing its fiscal problems, and that the bond plan - dubbed "Outright Monetary Transactions", or OMT - had calmed financial markets, even if it hasn't been used yet.

He declined to comment on whether Spanish bond yields were at appropriate levels. An auction earlier on Thursday saw Spanish borrowing costs fall. "I could say that today, we are ready with our OMT," Draghi told a news conference outside the Slovenian capital of Ljubljana. "We have a fully effective backstop mechanism in place once all the prerequisites are in place as well."

Draghi, however, shot down suggestions that the ECB would help Greece by extending the maturities of the Greek debt it holds, saying that would be financing governments, which its rules forbid the ECB from doing.

Before his news conference, the central bank announced that its governing council had decided to keep its main refinancing rate steady at 0.75%, a record low.

Some analysts still expect the bank to cut rates later this year, although Draghi said a cut had not been discussed at the meeting in Slovenia, reducing chances of a reduction in borrowing costs next month.