The European Central Bank kept its policy unchanged as expected on Thursday, staying on course to end bond purchases by the end of December and to raise rates sometime after next summer.

With inflation rebounding and growth on a five-year run, the ECB has been removing stimulus for much of this year, even if more recent growth indicators appear to show that the expansion is running out of steam and risks to the outlook are mounting.

But with the bank having already exhausted much of its firepower the threshold for an extension of its stimulus is high, requiring a major shock rather than the gradual slowdown that has characterized this year.

The bank also made no change to its policy guidance, first formulated in June and kept broadly unchanged through several meetings.

"The Governing Council expects the key ECB interest rates to remain at their present levels at least through the summer of 2019, and in any case for as long as necessary," it said, repeating its guidance.

With Thursday's decision, the ECB's rate on bank overnight deposits, which is currently its primary interest rate tool, remains at -0.40 percent.

The main refinancing rate, which determines the cost of credit in the economy, remained unchanged at 0.00 percent while the rate on the marginal lending facility — the emergency overnight borrowing rate for banks — remains at 0.25 percent. 

 Draghi: Ample monetary accommodation is still needed

An ample degree of monetary accommodation is still necessary for the continued sustained convergence of inflation to levels that are below, but close to, two percent over the medium term said the European Central Bank governor Mario Draghi.

He said there is evidence that wage increases are here to stay, and the labor market is "tighter and tighter." But ample monetary accommodation is still needed for inflation to converge with the ECB's target.

"While measures of underlying inflation remain generally muted, they have been increasing from earlier lows. Looking ahead, underlying inflation is expected to pick up towards the end of the year and to increase further over the medium term", he said.

He also believed that an agreement between the EU and Italy would be reached over the latter's 2019 spending plans.

"On Italy, if they (bonds) lose value then they are denting into the capital position of the banks, that's obvious. But I am still confident an agreement will be found," Draghi said.

After his remarks, the euro reached 1.1428 versus the US dollar before retracing to 1.1400 at the end.