By Paul Hannon and Todd Buell 

FRANKFURT--European Central Bank President Mario Draghi Thursday said policy makers will "look through" a recent pickup in the annual rate of inflation if they're not convinced it will be sustained.

The annual rate of inflation in the eurozone rose to 1.1% in December from 0.6% in November, the fastest rate of price growth since September 2013. In Germany, the eurozone's largest member, prices rose by 1.7%.

The December jump brought inflation closer to the ECB's target of just below 2%, suggesting policy makers may soon have reason to reconsider their December decision to extend their bond-buying program to the end of this year.

However, the pickup in inflation has been almost entirely due to a stabilization and, more recently, an increase, in energy prices, and policy makers don't appear to be convinced that a sustained rise to target can be assumed.

"Underlying inflation pressures remain subdued," Mr. Draghi said. "The governing council will continue to look through changes in inflation if they are judged to be transient and to have no implication for the medium term outlook for price stability."

Mr. Draghi was speaking in a news conference following a decision by the ECB's governing council to leave its main interest rates unchanged. The central bank reiterated that it would continue to make asset purchases at EUR80 billion ($84.21 billion) a month until the end of March and then at EUR60 billion a month from April to December, "or beyond, if necessary."

European stocks saw a rebound when Mr. Draghi said the ECB would stand ready to expand quantitative easing. The euro turned lower against the U.S. dollar as investors detected a dovish slant to the ECB president's opening statement. The euro fell to a low of $1.0603, below a rate around $1.0665 before he started speaking.

Mr. Draghi also set a high bar for meeting the inflation target in a way that would satisfy policy makers.

"It has to be a durable convergence, it cannot be transient," he said. "It has to be self sustained ... it has to stay there even when the extraordinary monetary policy will not be there."

Write to Paul Hannon at paul.hannon@wsj.com and Todd Buell at todd.buell@wsj.com

(END) Dow Jones Newswires

January 19, 2017 09:23 ET (14:23 GMT)

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