The European Central Bank kept its emergency monetary stimulus unchanged as the region enters a critical phase in its recovery from the coronavirus crisis.

President Christine Lagarde and her colleagues held their pandemic bond-buying program at 1.35 trillion euros (US$1.6 trillion) and the deposit rate at -0.5 per cent on Thursday, maintaining the flood of liquidity that has calmed markets and kept borrowing costs low.

While officials are becoming more confident in the rebound from the worst economic shock in living memory, the upturn has slowed and new risks lie ahead. Infections are rising again and the stronger euro could weigh on inflation. Economists expect the ECB to increase and extend bond purchases later this year.

Lagarde will hold a press conference call at 2:30 p.m. Frankfurt time to explain the ECB’s decision and unveil new projections for output and inflation.

The ECB predicted a record 8.7 per cent contraction for 2020 back in June. That figure will now show an improvement, according to a person familiar with the matter, and the overall forecasts through 2022 will be little changed.

Executive Board members Philip Lane and Isabel Schnabel both said recently that data seen over the summer months more or less confirm the June projections.

Lagarde may choose to address the rise in the euro though, which has jumped more than 10 per cent against the dollar since March. That makes the ECB’s job of boosting inflation harder by driving down import prices. Lane, the institution’s chief economist, said this month that the exchange rate “does matter” for monetary policy.

The president is likely to be quizzed in her press conference on how long the ECB expects to use its pandemic bond-buying program, and whether it’ll be increased. Some officials have stressed the importance of limiting its duration.

The program is currently scheduled to run through June next year. Most economists surveyed by Bloomberg expect an announcement by December to add 350 billion euros and extend it by six months.