The European Central Bank will start buying securitised loans and covered bonds next month to help unblock lending in the euro zone, ECB President Mario Draghi has said.

He made his comments after the European Central Bank cut interest rates to a fresh record low.

The unexpected move brings borrowing costs close to zero and is an attempt to lift inflation from rock-bottom levels and support the stagnating euro zone economy. 

The ECB cut its main refinancing rate to 0.05% from 0.15% previously.

It also drove the overnight deposit rate deeper into negative territory, now charging banks 0.2% to leave funds with it - and cut its emergency borrowing rate to 0.3%. 

The ECB also cut its forecasts for growth in the 18-country euro area this year and next year, and also lowered its projection for area-wide inflation.

The ECB is now pencilling in gross domestic product growth of 0.9% in 2014 and 1.6% in 2015, according to Draghi.

The ECB President told reporters in Frankfurt today that the decision on the interest rates as well as the asset purchases was "not unanimous". But he said that there was a "comfortable majority in favour of doing the programme."

"The Governing Council decided to start purchasing non-financial private sector assets," Draghi told his monthly news conference. 

He said the bank would buy broad portfolios of simple and transparent asset-backed securities and of euro-denominated covered bonds from October.

Full details of the new programmes will be given after the ECB's next meeting on October 2.

Taken together with the ECB's new long-term loans to banks, to be offered for the first time later this month, "the newly-decided measures will have a sizeable impact on our balance sheet", Draghi said.

He said the ABS programme "reflects the role of the ABS market in facilitating new credit flows to the economy".
The programmes are part of the ECB's broader efforts to boost lending, particularly to smaller and medium-sized companies, which form the backbone of the euro zone economy.
Banks create ABS by pooling various loans together and selling different tranches on to investors to lighten the load on their balance sheets, which allows them to issue new credit.
Some complex ABS structures played a part in sparking the global financial crisis. The European ABS market has still not recovered, in part because post-crisis regulatory changes have made the assets less attractive to investors.
European Union finance ministers will meet on September 13 in Milan to discuss rekindling securitisation after issuance in Europe sank to €181 billion in 2013 from €711 billion in 2008. 

In contrast, the US market has sprung back from €934 billion in 2008 to €1.5 trillion last year.  

The ECB President also said that the bank's governing council also discussed quantitative easing in the form of an outright asset purchase programme.
"QE was discussed. Some of our Governing Council members were in favour of doing more than I've just presented, and some were in favour of doing less. So our proposal strikes the mid-road," Draghi said.

He also signalled that there will be no more euro zone interest rate cuts. "Now we are at the lower bound where technical adjustments are not going to be possible any longer," he told reporters.

The euro slumped today after the unexpected move on rates from the ECB. The euro dived to $1.3037 - the lowest level since the middle of July 2013 - minutes after the ECB decision from $1.3142 earlier in the day.