I like how PIMCO have previewed Draghi and the European Central Bank meeting
- "ECB Preview: Credibly Promising to Behave Irresponsibly"
:-D
More (bolding is mine):
Inflation has undershot the European Central Bank's (ECB) target of 2% since 2013, and the ECB staff's current inflation forecast of 1.7% for 2017 looks unrealistic
- Without additional measures from the central bank, we think inflation in 2017 could be as low as 1.3%
- Five years of below-target inflation (2013-2017) runs the risk inflation expectations permanently de-anchor - as witnessed in Japan - from the target.
- Additional stimulus, we believe, is therefore warranted.
We think the Council will increase monthly asset purchases from the current €60 billion to about €70 billion, effective January 2016, and extend this pace to at least March 2017
- ECB's expanded quantitative easing (QE) programme ... could end up adding an additional €500 billion of asset purchases on top of the original €1.14 trillion the ECB already intends to purchase
- In addition, the ECB will likely lower interest rates on the standing facilities. We think the Council will cut the Main Refinancing Operations rate by five basis points (bps) to 0% and the Deposit Facility rate by 10 bps to -0.3%.
- We see the risks to this forecast to be even more, rather than less, stimulus.
