European Central Bank President Mario Draghi said the bank's all-important inflation target should not be viewed as a 2% cap.

His comments marked a significant move and were accompanied today by further explicit hints of easing down the road. 

Euro zone inflation is stuck well below its target, industrial output in Germany is in freefall and the US Federal Reserve is already in easing mode.

It was widely seen as just a matter of time before the ECB opened the door to more stimulus. 

The ECB, which kept interest rates unchanged for now, said in its statement it saw rates at present or lower levels up to the middle of 2020, giving up a previous pledge to keep rates unchanged until next June. 

It also tasked its staff to look at various other easing options including restarting asset purchases. 

"This outlook is getting worse and worse," Mario Draghi told a news conference, adding that a once-hoped-for rebound in the second half of the year was "less likely". 

The ECB statement also omitted its standard reference to an aim of inflation rates "below, but close to, 2%" over the medium term, talking instead of a "commitment to symmetry in the inflation aim". 

"The bottom line is basically we don't like what we see on the inflation front and symmetry means there is no 2% cap. Inflation can deviate on both sides," he said. 

The increasingly overt promises of more stimulus are intended to prop up confidence in a euro zone economy struggling with a manufacturing recession that risks unravelling years of stimulus. 

While consumer confidence, employment and bank lending remain healthy, a recent string of industrial sentiment indicators paint a dismal picture, raising the risk that weak external demand, partly the result of a global trade war, could soon infect the domestic economy. 

The euro eased on the ECB's decision, trading at around $1.111 against the dollar compared with around $1.113 before the bank's announcement. 

It later moved higher as Draghi said the risk of an all-out recession was still low. 

"The Euro tested this year's lows against the Dollar around 1.11 and Euro/Sterling briefly traded below 89p, before rallying back to 89.5p," Ronan Costello, Head of Euro Money Markets, Bank of Ireland said.

"With the markets clearly disappointed by today’s announcement, the Euro could gain further if the US Federal Reserve cut interest rates at their meeting next week."

Expectations of new ECB stimulus have already driven down borrowing costs for euro zone governments, with the yield on Germany's 10-year bond delving deeper into negative territory at -0.41% today - close to a record low. 

The case for ECB stimulus is supported by weak economic data, particularly in foreign trade and manufacturing, the engine of the euro zone economy's recent growth run. 

Indeed, the German Ifo institute warned earlier today that recession was spreading across all important sectors of German industry and sentiment was deteriorating quickly. 

"There is far and wide nothing to be seen of the second half recovery hoped for in many places," Commerzbank economist Joerg Kraemer said. "Germany is in a grey area between a marked growth slowdown and a recession." 

While some argue there is no urgency for ECB action, Draghi has just three months left of his eight-year tenure, giving him only a handful of opportunities to secure his legacy before he hands over to Christine Lagarde on October 31. 

Another problem is that whatever measure the ECB takes over the coming months, they all come with complications and have only limited potency given that the ECB has already exhausted much of its firepower. 

Rates are already at record lows and the ECB's balance sheet is equivalent to 40% of the block's economic output, suggesting that the limits of its stimulus are near. 

Buying more government bonds could also create problems for the bank as it is at or near its self-imposed limits for several of the 19 euro zone countries. 

While policymakers say they have leeway to adjust their rules, critics of the bank's asset purchases, who have already launched several legal challenges, are almost certain to take the ECB back to court.