The ECB's move to persist with stimulus contrasts with major central banks elsewhere, a differing stance Lagarde's comments implicitly emphasized. The
U.S. Federal Reserve and the Bank of England have signaled their intention to gradually unwind crisis-era aid.
The timetable for slower purchases in the next three months now makes the Dec. 16 meeting a crucial one for the future of the central bank's stimulus programs. While the president said the decision was unanimous, keeping that consensus may be a challenge among policy makers whose judgments on the
threat posed by inflation are known to differ.
New staff forecasts showed a stronger near-term outlook for prices and growth, though still insufficient to fulfill its mandate. Inflation will average only 1.5% in 2023, below its 2% target.
Ms. Lagarde's balanced message to investors meant the ECB was able to dial down its level of stimulus without provoking an immediate market backlash. The euro trimmed gains as she spoke, trading little changed on the day at around $1.1814 as of 16:24 p.m. Frankfurt time.
"This is not a tapering decision, as ECB President Lagarde stressed," Elga Bartsch, head of macro research at the BlackRock Investment Institute, said in an emailed comment. "Asset purchases look here to stay as the new policy framework paves the way for looser for longer monetary policy in the euro area."
Mark Dowding, who oversees $70 billion at BlueBay Asset Management LLP, was less convinced by Ms. Lagarde's protestations.
"To me it is just semantics," he said. "It is a choice of words. It looks like a taper and smells like a taper, so markets will view it as the start of the taper process."
With supply-chain disruptions and resurgent virus infections threatening to undermine the recovery and medium-term price pressures likely to remain well below its goal, officials have insisted in recent weeks that the eurozone economy is in a different state than the U.S. and remains reliant on ECB support.
Yet some governors have started to warn publicly that maintaining an ultra-accommodative stance for too long also carries risks. Austria's Robert Holzmann and Klaas Knot of the Netherlands both told Bloomberg in separate interviews last week that emergency asset purchases should end in March, hinting at heated discussions about the policy path in the months ahead.
The ECB's main guide will be financing conditions across the 19-nation bloc. Government bond yields and the euro slid over the summer months, before picking up again recently in anticipation of Thursday's announcement.
Policy makers also took the following decisions:
- The deposit rate remains at -0.5%.
- Interest rates won't rise until projections show inflation sustainably at 2%. and underlying price pressures are consistent with that goal.
- An older asset-purchase program continues at 20 billion euros a month.
- Long-term loans to banks will continue to support lending.