By Todd Buell in Frankfurt and Paul Hannon in London 

FRANKFURT--European Central Bank President Mario Draghi indicated on Thursday that the bank stands ready to expand its stimulus programs if slowdowns in large developing economies and turbulence in financial markets hinder its ability to boost inflation to a target of just under 2%.

In a news conference, Mr. Draghi projected slower-than-expected economic growth in the eurozone, as well as lower inflation rates, as exports to China and other developing economies are likely to be less than previously hoped.

He repeatedly stressed the central bank's "willingness and ability to act if warranted," suggesting the ECB could broaden its stimulus programs.

Mr. Draghi's comments weakened the euro's exchange rate and sent European shares higher as investors anticipated a fresh round of stimulus. However, he said policy makers hadn't discussed the size of the central bank's bond buying program, or its preferred options should it come to adding fresh stimulus.

"We aren't there yet," he said.

Mr. Draghi said an "interim evaluation" of the impact of recent turbulence in global financial markets and signs of a slowdown in China, points to "continued, though somewhat weaker economic recovery, and a slower increase in inflation rates compared with recent expectations."

He added that while the "downside risks" to growth and inflation have increased, it was possible recent developments in financial markets would be "mainly transitory."

"We had a worsening of the situation in several emerging market economies, and it's unlikely these challenges are going to be quickly reversed," Mr. Draghi said. "Secondly, we had a tightening of financial conditions across the board. We'll have to see whether this is short-term volatility, or is permanent."

Mr. Draghi said he expects Chinese officials to provide more details of their plans for tackling the economic slowdown and stock market falls during a meeting of finance ministers and central bank chiefs from the group of 20 largest economies in Ankara, Turkey.

"That is going to be one of the major themes," he said. "We do expect to have much more visibility in the coming days than we do now."

Earlier Thursday, the ECB left its main policy rate for its regular loans to banks at 0.05%. It also left its deposit rate, the rate it pays for banks to park excess funds overnight, at minus 0.20%, meaning that banks continue to pay to park cash with the ECB.

Since March, the ECB has purchased EUR60 billion ($68 billion) a month in mostly government bonds in an effort to revive inflation and growth in the currency bloc by adding to the money supply. The program is intended to run through September 2016, or until inflation is back to target.

Mr. Draghi announced a slight change to the program that would allow the central bank to buy a larger share of each individual bond issue, raising its limit to 33% from 25%. That should make it easier for the central bank to find the bonds it needs to complete the program, or increase it if needed.

"Technical aspects will not stop the full implementation of the program, " he said.

Recent data on bank lending to households and companies suggest the ECB's stimulus is starting to find its way into the economy. But there is concern that QE isn't doing enough to bring inflation back to the ECB's medium-term target of just below 2%.

The most recent data, published Monday, showed annual inflation in the currency bloc at only 0.2% in August.

Lower energy prices and upward pressure on the euro, stemming from uncertainty about the timing of rate rises in the U.S., are keeping consumer price pressures subdued. Meanwhile, signs of slowing in China have raised concerns that European exports may not be as strong as expected.

The ECB's economists lowered their forecasts for inflation over coming years, and indication that policy makers may have to expand their bond buying program if they are to succeed in raising the inflation rate to their target.

The economists now expect an inflation rate of 0.1% in 2015, 1.1% in 2016 and 1.7% in 2017. In June, they forecast a rate of 1.8% in 2017, up from 1.5% in 2016 and 0.3% this year.

They also cut their growth forecasts, and now expect the eurozone economy to grow by 1.4% this year, 1.7% in 2016 and 1.8% in 2017. In June, they forecast growth of 1.5% in 2015, 1.9% next year and 2% in 2017.

Write to Todd Buell at todd.buell@wsj.com and Paul Hannon at paul.hannon@wsj.com

(END) Dow Jones Newswires

September 03, 2015 10:14 ET (14:14 GMT)