Draghi under pressure of his own making to deliver stimulus

"Draghi has increased expectations that the ECB is preparing to act again," said Nomura economist Nick Matthews.

"Our reading of his speech is that his deviation (from his text) was important and significant and, we think, intended to signal that some further action was likely the next month."

Draghi's problem is the ECB is running out of weapons with which to fight the low inflation - running at just 0.3 percent - and stagnation gripping the 18-country euro zone. The ECB targets inflation of just under 2 percent over the medium term.

The one big weapon the ECB retains is quantitative easing (QE) - essentially printing money to buy assets. Though other central banks have used this tool, hawkish members of the ECB's 24-member policymaking council are resistant.

"The barrier to QE is still very high," one ECB source told Reuters last week.

Nomura's Matthews thought that Draghi's use in Jackson Hole of the term "all instruments", rather than the "unconventional instruments" he referenced in the original text of the speech, put an interest rate cut on the table.

However, a Reuters poll pointed to no change in rates, which are already at record lows.

LIMITED OPTIONS

Another policy option the ECB has flagged without yet launching is a programme to purchase asset-backed securities (ABS), with a view to stimulating this market and offering smaller businesses an alternative source of funding.

"It's difficult to imagine the ECB turning up on Thursday and doing very little," said ABN Amro analyst Nick Kounis. "I think the ABS purchase programme is the absolute minimum."

Draghi said in Jackson Hole the ECB's preparations for an ABS purchase programme were "fast moving forward and we expect that it should contribute to further credit easing."

The ECB has already committed to new bank funding plan, with the first so-called TLTRO operation set for Sept. 18, which it believes will help stimulate the economy. It may want to see how that plays out before taking any further action.

"The likely uptake from periphery banks in particular will be fairly aggressive we think," said Owen Murfin, fund manager with BlackRock's global bonds team.

As well as hinting at further ECB policy action, Draghi used his Jackson Hole speech to urge governments to use fiscal policy and structural reforms to support the euro zone economy.

Many observers focused on Draghi's comment that there was scope for governments to use fiscal policies to help growth as the main message of the speech.

ECB Executive Board member Sabine Lautenschlaeger disputed that reading on Wednesday, calling the focus on more growth-friendly government spending "a very one-sided" interpretation.

In remarks suggesting she would resist further significant ECB stimulus, Lautenschlaeger, a German, added: "For me the main message was that structural reforms are the most important tool to solve the problems that we currently have."

Loose ECB policy is regarded with scepticism by many in Germany. Finance Minister Wolfgang Schaeuble said last week that monetary policy has run out of tools.

Top bankers also expressed scepticism at a banking conference in Frankfurt on Wednesday: "The equation that ECB money means time is not valid anymore," said Georg Fahrenschon, president of Germany's Sparkassen savings banks association.

"The more time the ECB buys the more it exposes itself to growing political expectations," he added.

Deutsche Bank Co-CEO Anshu Jain said his group was grateful for the steps the ECB has taken, but added: "We are getting to the point where much more wouldn't make that big a difference."