ECB headquarters in Frankfurt. (Photo: AP)

The European Central Bank will reduce its monthly bond purchases next year in a step toward ending a program that has spent more than 2 trillion euros ($2.4 trillion) trying to revive euro-area inflation.

(Related: Fed to Begin Balance Sheet Cuts; Hints Rate Hike Up Next)

Policy makers agreed to scale back buying to 30 billion euros a month starting in January and continue for nine months until the end of September, a decision that was in line with economists’ estimates. That’ll take its total holdings to at least 2.55 trillion euros.

(Related: Fed Raises Rates, Lays Out Plan to Cut Balance Sheet)

Still, the central bank also emphasized that it’ll move extremely cautiously. It kept its pledge to step up or extend buying further if needed, changed the language on its reinvestment strategy for maturing debt, and reiterated that banks will be able to borrow as much as they need in refinancing operations.

(Related: Is Now the Time to Invest in European Stocks?)

“The door is left open to extend the asset-purchase program yet again,” said Ken Wattret, an economist at TS Lombard in London. “Though the likelihood of this happening for a fourth time looks rather lower now for various reasons, including the positive economic outlook.”

The euro dropped after the announcement, trading down 0.5 percent at $1.1758 at 2:11 p.m. Frankfurt time, and European government bonds jumped.

The decision marks a watershed moment for Mario Draghi, who heads into the final two years of his ECB presidency after a tenure spent easing policy to contain the fallout from the region’s debt crisis and stave off deflation. The 19-nation bloc is on track for its fastest expansion in a decade, and the central bank is betting that inflation is finally on the verge of picking up.

Reinvestment Plans

Draghi has repeatedly said that “we aren’t there yet” on inflation, which was just 1.5 percent last month and which the central bank predicts won’t return to its goal of just under 2 percent before late 2019 at the earliest. 

The Governing Council reiterated that it will continue to spend 60 billion euros a month on debt until the end of December. Officials kept the main refinancing rate at zero percent, the deposit rate at minus 0.4 percent and the marginal rate at 0.25 percent. They repeated a pledge that borrowing costs will stay at present levels until well past the end of net asset purchases.

The ECB said the proceeds of maturing debt will be reinvested for an “extended period of time after the end of its net asset purchases, and in any case for as long as necessary.” It also stressed that lending to banks will be conducted at a fixed interest rate and with full allotment for as long as needed.

The attention now turns to the news conference, where Draghi will face questions about his reasoning for the decision. The issue of precisely when the program — a key demand of some governors — remains unresolved. Another core factor is the availability of debt under the current QE rules. Some policy makers judge that the central bank has room to buy little more than 200 billion euros of bonds after December before it runs into shortages.

Copyright 2018 Bloomberg. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.