FRANKFURT. (Reuters). The European Central Bank did not change its policy on Thursday, as was widely anticipated. However, it held the line before a crucial set of December decisions that would have a significant impact on policy. These key decisions were to end pandemic emergencies and return policy to a more regular setting.

In confirming its policy stance, ECB continues to buy bonds at a slower rate this quarter than it did in the six-months prior. The goal is to lower borrowing costs and keep the economy thriving after the pandemic.

Financial investors are increasingly questioning this ECB policy on inflation and have challenged its guidance to continue keeping interest rates extraordinarily low over the years.

Guidance calls for stable or lower rates to ensure that inflation returns to the ECB’s 2% goal by the middle part of its projection horizon, and stays there on a long-term basis.

The ECB projections do not suggest that this will happen in the years ahead, but markets are now expecting a rate rise before 2022. Markets believe inflation will continue to climb after it spiked more than the policymakers predicted.

The growth in consumer prices is forecast to be 4% next year, before a gradual decline the year after that. But the ECB (and financial investors) differ as to how fast and far the price rise will slow down over the years.

Christine Lagarde (ECB President) is expected to reiterate the bank’s long-standing belief that inflation in the medium term will be below target. This means that there will not be any conditions for a rate increase next year.

Her argument is likely to be that wage growth, which is a component of lasting inflation, remains so low that there is no risk of enduringly higher inflation.

Lagarde will still be expected to admit that inflation pressures have risen and that there are upside risks to price growth.

December is likely to see the ECB decide whether or not it will end its emergency assistance for pandemics and replace the support that was lost with newer measures.