ECB will review monetary policy stance at March meeting, Draghi says

The European Central Bank will reconsider its monetary policy at its next meeting in early March amid volatility in commodities and uncertainty surrounding emerging markets, President Mario Draghi said on Thursday.

In a press conference following the ECB's decision to keep key rates unchanged, Draghi hinted at policy action next month to help push inflation back towards the target of just below 2%.

A final estimate from Eurostat on Tuesday showed the Eurozone consumer price index rose 0.2% in December, as expected by analysts. November was revised down to 0.1% from a previous estimate of 0.2%.

Draghi noted that the impact of falling oil prices and external factors meant inflation was expected to remain very low or at negative levels in coming months.

He highlighted that downside risks to inflation included heightened uncertainty about the economies of emerging markets amid a slowdown in China, volatility in financial markets and commodities, and geopolitical risks.

"It will therefore be necessary to review and reconsider our monetary policy stance at our next meeting in early March when macro projections become available," he said.

He didn't specify what tools the ECB might use but said there were "no limits to what extent" the Governing Council was willing to act in using instruments within its mandate, if needed.

Draghi said when ECB reviews policy next month, it will look at the extent and persistence of low oil prices and whether it will feed into other prices.

"When we look at (commodities prices) we don’t have many reasons to optimistic about that," he said.

"When we look at wages we don't have many reasons to be optimistic about that," he added.

Draghi defended the ECB's past policy measures as “entirely appropriate”, including last month's decision to cut the deposit rate by 10 basis points and to extend the €60bn a month asset purchase programme until at least the end of March 2017.

"As the ECB has already extended running its quantitative easing programme to at least the end of March 2017, this suggests that there has to be a good chance that the ECB will step up its monthly spend on assets from the current level of €60bn," said Howard Archer, chief UK and European economist at IHS Global Insight.

"However, there is clearly a significant bloc within the Governing Council, led by the German contingent, that is against more QE."

Earlier, the ECB announced it would leave interest rates 0.05%, the deposit facility rate at -0.30% and the marginal lending facility at 0.30%. The decision to hold steady on rates came as no surprise to the market.