The ECB has committed to purchasing 1.85 trillion euros ($2.2 trillion) of bonds until March 2022 as part of its Pandemic Emergency Purchase Program (PEPP), and policymakers voted to keep this stimulus on the table for the time being.

Interest rates were also left unchanged, with the rate on the main deposit facility remaining at -0.5%, the benchmark refinancing rate at 0% and the marginal lending facility at 0.25%.

However, the euro zone central bank’s Governing Council revised its forward guidance on interest rates, having upgraded its inflation target to a symmetric 2% over the medium term at its recent strategy review.

The ECB said in a statement that it expects interest rates to remain “at their present or lower levels until it sees inflation reaching two per cent well ahead of the end of its projection horizon and durably for the rest of the projection horizon, and it judges that realised progress in underlying inflation is sufficiently advanced to be consistent with inflation stabilising at two per cent over the medium term.”

“This may also imply a transitory period in which inflation is moderately above target,” it added.

The dovish tilt effectively ties inflation to interest rates and was seen as a promise to be more accommodative for a longer period of time.

The euro quickly spiked to 1.1804 against the dollar on the news, but then trimmed those gains to sinks to session lows of 1.1777.

With interest rates close to their lower bound for some time and inflation remaining below the Governing Council’s target, the ECB also vowed to maintain a “persistently accommodative monetary policy stance” in order to meet its inflation target.

The latest ECB forecasts point to a headline inflation of 1.9% at the end of 2021, followed by a decrease to 1.5% and 1.4% in 2022 and 2023, respectively.