Mario Draghi, president of the European Central Bank Courtesy of Wikimedia Commons

European stock markets rallied yesterday after Mario Draghi, president of the European Central Bank (ECB) fulfilled market expectations and announced that the bank would launch an unlimited bond-buying program to hold down the borrowing costs of debt-plagued euro zone countries.

The program, called Outright Monetary Transactions, allows for unlimited ECB purchases of sovereign bonds on the secondary market. It will focus on bonds with a maturity period of three years and less. Bond yields have increased significantly in recent months for Spain and Italy, sparking worries the debt crisis was spreading.

The ECB's move is supposed to reverse this trend, easing pressure on sovereign borrowing costs. “The Euro is irreversible,” Draghi said when announcing his decision.

Investors in Warsaw shared the wide-spread enthusiasm as the WSE’s blue-chip WIG20 index rose 1.6%. “I’m not a big fan of such EBC actions, but if we want to keep the euro zone in its current shape we have no other choice,” said Jakub Borowski, chief economist at Kredyt Bank.

Poland A.M.