October 20, 2015 / 9:44 AM / 2 years ago

UPDATE 1-ECB could extend, modify asset purchasing programme -Bank of Spain

(Adds comment, background)

By Jesús Aguado

MADRID, Oct 20 (Reuters) - The European Central Bank could extend and modify its asset purchase programme aimed at boosting inflation and growth in the euro zone, Bank of Spain Governor Luis Maria Linde said on Tuesday.

The ECB's Governing Council meets in Malta on Thursday and markets expect a dovish message, highlighting a willingness to act to boost inflation, but few if any concrete adjustments to its 60 billion euros ($68 billion) a month asset purchase programme.

However, expectations that the quantitative easing programme could be extended or expanded are running high.

"If the (ECB) deems it necessary, it could use the flexibility it has given the acquisition programme to extend its size and duration or modify its composition," Linde said.

ECB policymaker Ewald Nowotny said last week new policy instruments would be needed to face slowing growth and inflation that turned negative again.

Linde said current inflation levels in the euro bloc were worryingly below the ECB's target of near 2 percent.

"The risk of medium-term inflation expectations de-anchoring doesn't seem near but, even so, the trend in the last few months once again is worrying," Linde said.

Consumer prices in the euro zone fell 0.1 percent in September as oil prices dropped, the first negative reading since March.

Linde also said that while uncertainty surrounding economic forecasts had risen in the last few months and downside risks had grown due to a deterioration of the world economy, Spain's economy remained strong.

The Bank of Spain expects national economic output to grow by over 3 percent this year while average inflation would end the year below zero. ($1 = 0.8807 euros) (Writing by Paul Day; Editing by Sonya Dowsett/Ruth Pitchford)

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