Quotes from Lloyds Bank:- We expect the ECB to opt for QE in an attempt to stave off a deflationary spiral. Against a backdrop of persistently weak euro area growth and falling oil prices, the risks of euro area inflation, currently at 0.3% y/y, turning negative over the next few months are rising. – This could entrench inflation expectations below the level consistent with the ECB’s inflation target of “close to but below 2%” which could further undermine growth. A recent flurry of ECB stimulus measures, such as the TLTRO lending facility, purchases of covered bonds and asset-backed securities have, so far, had less-than-hoped-for impacts on boosting demand. – In the absence of a rapid improvement in the data, which looks unlikely, we expect the ECB to embark upon a full-blown sovereign QE programme as early as 2015Q1.
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