Speaking at a conference, Draghi said that "further cuts in policy rates ... remain part of our tools." He added that "additional stimulus will be required" to boost inflation, and hinted at the possibility of restarting a program to spur bond purchases.
His comments fueled stock gains in Europe. France's CAC 40 advanced 1.4% to 5,465 and the DAX in Germany jumped 1.2% to 12,231. Britain's FTSE 100 picked up 0.8% to 7,400.53. Wall Street was also set to open higher, with the future contract for the S&P 500 index adding 0.5% to 2,911. Futures for the Dow gained 0.4% to 26,250.
The U.S. Federal Open Market Committee will hold a two-day meeting starting Tuesday. Traders are keeping a close watch on a policy statement to be released Wednesday and a news conference by Fed Chairman Jerome Powell shortly after that.
Powell will likely stick to the theme of a speech he made earlier this month: That the Fed will act if it thinks the Trump administration's trade conflicts are threatening the U.S. economy. Financial markets had rallied on his remarks, which fueled hopes that the Fed would cut interest rates this year.
Although a rate cut isn't expected this time around, fresh comments from Powell could support another wave of buying or have investors swing the other way. Central banks in Britain and Japan will also announce their latest monetary policy decisions this week.
"Global equity markets have overall performed well in June, although the gains have been built on shaky foundations," Lukman Otunuga of FXTM said in a commentary. "Should central bank policymakers sound less downbeat than the market is expecting and soften speculation of monetary easing, stock markets face the risk of tumbling like a house of cards," he added.
The Reserve Bank of Australia released minutes from a policy meeting in June on Tuesday. The meeting resulted in it easing its cash rate to 1.25%. According to the minutes, members agreed that further rate cuts were "more likely than not" in the period ahead.
Meanwhile, uncertainties surrounding a trade dispute between the U.S. and China continued, ahead of a possible meeting between U.S. President Donald Trump and Chinese leader Xi Jinping at the Group of 20 summit in Osaka, Japan, later this month.
Markets in Asia were upbeat. Hong Kong's Hang Seng rebounded 1% to 27,498.77 and the Kospi in South Korea rose 0.4% to 2,098.71. The Shanghai Composite index jumped 0.1% to 2,890.16. Australia's S&P ASX 200 was 0.6% higher at 6,570.00, while Japan's benchmark Nikkei 225 eased 0.7% to 20,972.71. Shares rose in Taiwan and throughout Southeast Asia.
ENERGY: Benchmark U.S. crude lost 16 cents to $51.77 a barrel. The contract gave up 58 cents to $51.93 a barrel on Monday. Brent crude, the international standard, shed 29 cents to $60.65 a barrel. CURRENCIES: The dollar slipped to 108.27 yen from 108.53 yen. The euro retreated to $1.1191 from $1.1220.
Matt Ott in Madrid contributed to this report.