Irish benchmark bond yields hit another record low on a day when bond markets across Europe were setting new marks.

The yield on Irish government bonds fell to 1.464 per cent, the lowest level since Bloomberg started collecting the data in 1991.

Moments after ECB president Mario Draghi on Friday declared the bank would "do what we must to raise inflation and inflation expectations as fast as possible . . ." prices across the euro zone's sovereign bond market jumped.

As Mr Draghi went on to clarify that the ECB was prepared to “step up the pressure and broaden even more the channels through which we intervene”, investors did a quick translation: euro zone sovereign bond buying was on the table.

The market rally that began with Friday’s speech was still going strong yesterday.

For the first time, Spain’s benchmark borrowing costs dropped below 2 per cent, while Italian, French, Irish, Austrian and Belgian 10-year bond yields all hit record lows.

Even the surprise news that German business confidence had improved failed to put a stop to the trend.

Germany’s 10-year Bund yield, which moves inversely to prices, fell to 0.77 per cent – not a record low but not far off.

Cautious comments yesterday by Jens Weidmann, Germany's central bank president, that monetary policy cannot permanently boost growth prospects, pushed yields up, although by mid- afternoon they were still down on the day.

Target

With inflation at less than half the 2 per cent target, the ECB has stated that government bond-buying is one of the unconventional measures it is considering.

Sceptics counter that not only is there still substantial opposition to this step from members of the ECB’s governing council, there are also plenty of other ways the ECB can ramp up its activity before it reaches sovereign debt.

Matthew Cairns at Rabobank says with every passing comment from ECB policy makers it appears clearer that the ultimate goal is to target sovereign bond purchases.

Intermediary steps of alternative bond buying may come first, he believes – Copyright The Financial Times Limited 2014