Berlin - The European Central Bank took a key step on Thursday towards scaling back its monetary stimulus measures amid a pick-up in the eurozone economy.

The Frankfurt-based ECB plans to halve its monthly 60 billion euro (71-billion-dollar) bond-buying scheme from January, but to also extend it by nine months.

The bank's 25-member governing council also kept its benchmark refinancing rate on hold at a historic low of 0 per cent.

Solid economic expansion

ECB chief Mario Draghi told a press conference following the governing council's meeting that "economic expansion continues to be solid and broadly based."

Indicators, he said, "point to unabated growth momentum in the second half of the year" as the global economy powers eurozone exports and demand for loans increases.

Launched in March 2015 as part of the ECB's quantitative-easing plan, the bond-purchasing programme was slated to run at least until the end of this year, when it is forecast to total 2.3 trillion euros.

But the ECB now aims to extend the purchases for at least another nine months to September as it seeks to drive up inflation from its current annual level of 1.5 per cent to bring it more into line with the bank's target of just below 2 per cent.

However, the bank left open the possibility of adjusting the bond-buying programme again if the outlook becomes less favourable or inflation continues to fall short of its target.

In the meantime, Draghi said the ever-cautious ECB will keep interest rates at their historic low levels "for an extended period of time."

A step towards exit from the ECB's crisis mode

The prospects of a protracted period of low interest rates was to send the euro down by 0.5 per cent to 1.1743 dollars, while European shares edged higher.

The ECB has decided to take the first steps towards ending the scheme following signs of a pick-up in the eurozone economy, which is expected to post its fastest pace in 10 years in 2017.

Thursday's announcement was the second time that the ECB has cut back its bond-buying activities.

Last year it trimmed purchases from 80 billion euros a month to 60 billion euros.

"Today's decision is the first real baby step towards a very gentle exit from the ECB's crisis mode, but it is definitely not a big-bang U-turn," said ING Bank economist Carsten Brzeski.

By phasing out the controversial bond-buying scheme, the ECB hopes to avoid triggering any volatility in financial markets, which had been keenly waiting for Thursday's announcement.

However, the ECB has also been caught between opposing forces in the eurozone, with Germany leading several northern European states in pressing for an early end to the scheme.

At the same time, debt-hit southern members of the currency bloc have been arguing for a continuation of the scheme to help them steady their economies.