FRANKFURT • The European Central Bank left its quantitative-easing programme unchanged as policymakers wait to see if a pickup in inflation will be sustained.
The Governing Council reaffirmed its December decision that asset purchases will be reduced to €60 billion (S$91.2 billion) a month from April, from €80 billion currently. Policymakers also kept the main refinancing rate at zero and the deposit rate at minus 0.4 per cent.
"If the outlook becomes less favourable, or if financial conditions become inconsistent with further progress towards a sustained adjustment in the path of inflation, we stand ready to increase our asset-purchase programme in terms of size and/or duration," said ECB chief Mario Draghi in a press conference that followed.
The first policy decision this year comes six weeks after he said the threat of deflation had almost vanquished.
Price growth is starting to accelerate after almost four years of undershooting the ECB's goal, and in a sign that sentiment is gradually changing, executive board member Benoit Coeure acknowledged last month that the balance of risks to inflation is shifting.
Consumer prices rose an annual 1.1 per cent in December, more than twice than in November and the most since 2013. But the rate remains below 2 per cent and officials are concerned the increase is largely due to oil.
Core inflation picked up only slightly to 0.9 per cent, still lacking a convincing upward trend.
There is little sign that the Governing Council is ready to endorse more hawkish language just yet, even after a jump in inflation to 1.7 per cent in Germany, the region's largest economy, sparked media outrage.
Political uncertainty in the year ahead may also give officials reason to be cautious.