The European Central Bank maintained its massive stimulus programme on Thursday as it seeks to sustain the eurozone's tentative recovery from the coronavirus pandemic under pressure from supply shortages.

The ECB's 25-member governing council decided at its six-weekly meeting to keep interest rates at historic lows and continue the bank's monthly bond purchases at a "moderately lower" rate than in the second and third quarters in a turbulent period for the eurozone economy.

The 1.85-trillion-euro ($2.15-trillion) pandemic emergency bond-buying programme (PEPP) is the ECB's main crisis-fighting tool, aimed at keeping borrowing costs low to stoke economic growth.

Supply bottlenecks and energy price rises and one-off pandemic related effects meant that inflation "will last longer than originally expected", ECB President Christine Lagarde said in a press conference.

The same shortages, seen across the board in raw materials, components and labour, were "holding back production in some sectors", she said.

"The euro area continues to recover strongly, although momentum is moderated to some extent," she summarised.

The pressures on the economy would however "decline over the course of 2022", Lagarde said, easing inflation and allowing a deferred recovery to continue.

Behind the status quo stance, policymakers are split between hawks, who favour tighter monetary policy to stifle inflation, and doves, who want to maintain the bank's expansive policy.

Deliberations in the Thursday meeting were all about "inflation, inflation, inflation", Lagarde said, hinting at an energetic debate between members of the governing council.

In September, prices in the euro area rose 3.4 percent year-on-year, a 13-year high driven by soaring energy costs, with new Eurostat estimates set to be published on Friday.

In its most recent forecast published in September, the ECB said it expected inflation to fall to 1.5 percent by 2023, below its target to see inflation "durably" at two percent over the medium term.

The ECB's conditions for increasing interest rates were "not satisfied and certainly not in the near future", Lagarde said, pushing back against market expectations that a hike could come as early as 2022.

Inflation is likely to dominate discussion at the ECB's monetary policy meeting on Thursday
Inflation is likely to dominate discussion at the ECB's monetary policy meeting on Thursday AFP / INA FASSBENDER

The ECB's meeting comes a week before policymakers at the US Federal Reserve and the Bank of England gather to discuss possible changes to their own monetary policies.

The Fed has already signalled that it is "getting closer" to winding down its stimulus programme, as inflation in the US climbs higher.

The Governor of the Bank of England Andrew Bailey, meanwhile, has stated that it "will have to act" on inflation, setting off speculation that a rate hike could come as soon as next week.

"We are not talking about the same economies," Lagarde responded at the press conference when asked whether the ECB might follow suit.

The other central bank's higher projected inflation "fully justifies that they adopt different approaches," she added.

The focus on surging prices at the ECB meeting suggested the bank is now taking a more "balanced" view of inflation, according to Carsten Brzeski of ING.

The heightened sensibility to possible further rises paved the way for further reductions in the ECB's massive bond-buying scheme in December, he said.

The stimulus programme would "end at the end of March 2022", Lagarde said she expected, though a final decision is expected at the end-of-year meeting, when the ECB will also publish new economic forecasts.

The ECB would "make a clear distinction" between winding down the stimulus and hiking rates, allowing the former to fade out before taking on the latter, Brzeski said.

The euro popped higher, hitting an October high, during Lagarde's press conference. Analysts said was likely due to her comments on the stimulus plan ending and at times timid pushback to lingering market expectations for a 2022 rate hike.

Ideas are already being kicked around as to what could follow the ECB's pandemic programme in order to smooth the transition.

A separate pre-pandemic asset-purchasing programme, currently running at a pace of around 20 billion euros a month, could be boosted or altered to give the ECB more flexibility, according to one mooted proposal.

"What comes next is something that we will be debating at our next Governing Council meeting in December," Lagarde said.