Stock Market

ECB keeps rates and bond-buying program unchanged

The European Central Bank (ECB) announced that it was keeping its main rates and bond-buying program unchanged Thursday.

The euro zone’s central bank had been widely expected to stick with implementing its monetary stimulus program given the solid performance in the latter stages of 2016. Benchmark interest rates were left unchanged.

The ECB had said it would extend its generous bond-buying program at its December meeting albeit at a reduced pace of purchases. The central bank explained the new pace of asset purchases would be scaled back from 80 billion euros ($85.3 billion) a month to 60 billion euros from April onward.

Investors and analysts who had expected a six-month extension to the asset-buying program due to end in March were caught off guard in December. ECB President Mario Draghi dismissed the idea that the amendment to the pace of asset purchases could be viewed as easingoff, although conceded the concept of “tapering” had several meanings.

Meeting minutes from the ECB’s December meeting showed “a few members” had been opposed to the central bank extending its purchases beyond March.

Annual inflation rates in the eurozone jumped up from 0.6 percent to 1.1 percent which led to fresh calls from German advocates for the central bank to consider raising interest rates .

Federal Reserve Chair Janet Yellen said on Wednesday that it “makes sense” for the U.S. to gradually lift its interest rates in 2017 given the inflationary pressures on the economy. The recent uptick in annual inflation rates in the Eurozone could prompt the ECB to change tack should the trend continue.

ECB officials pointed to elevated levels of political uncertainty throughout 2017 as a reason for concern at theirDecember meeting. A series of elections are scheduled to be held this year, including in the Netherlands, France, Germany and Italy.