European Central Bank buying of government and other debt may be shielding countries in the eurozone from any knock-on effect from events in Greece, ECB president Mario Draghi said yesterday.

The ECB began a policy of printing money to buy sovereign bonds, or quantitative easing, on Monday with a view to supporting growth and lifting eurozone inflation from below zero up towards its target of just under 2 per cent.

“We also saw a further fall in the sovereign yields of Portugal and other formerly distressed countries in spite of the renewed Greek crisis,” Draghi told a conference in Frankfurt.

“This suggests that the asset purchase programme may be shielding euro area countries from contagion.”

Draghi spoke as Greece embarked on technical talks with its international creditors to agree reforms and unlock further funding amid growing frustration with Athens.

A slowdown in growth has reversed

The new left-wing Greek government, keen to show voters it is keeping a promise not to work with the detested troika of foreign lenders, has been trying to avoid having talks with inspectors from the three institutions in their own country.

Earlier this week, ministers spent barely 30 minutes discussing Greece at their monthly meeting, an EU official said, stressing it was time for Athens to engage in serious, detailed discussions with experts from the institutions formerly known as the ‘troika’.

On the outlook for the eurozone economy, Draghi said a slowdown in growth had reversed and that the recovery should “broaden and hopefully strengthen”.

Updated forecasts by ECB staff published last week showed the QE programme would support growth in the 19-country eurozone and lift inflation from below zero up to 1.8 per cent in 2017 – in line with the ECB’s goal.

Draghi said these forecasts were conditional on the full implementation of all the ECB’s announced measures.

The central bank plans to buy €60 billion a month of assets – mostly sovereign bonds – until at least September next year.