Analysts Foresee a Flexible Easing of Stimulus by ECB to Offer Stress Relief to Markets

Source: Bloomberg

Most economists expect the European Central Bank to raise the pace of regular bond-buying next year before the program ends in March to address eventual market stress. ECB is also expected to maintain flexibility in the pace of pandemic purchases. DAX is up +0.84%, EURUSD is up +0.07%.

• The economists expect the ECB to start phasing out the bond purchases in December. They do not expect any policy shifts by the ECB in the next week’s meeting. 
• The survey respondents foresee the ECB laying out a framework for the pandemic emergency purchase program not in excess of 1.85 trillion euros or $2.2 trillion.
• The economists expect the ECB to continue its conventional APP program to sustain favorable financing conditions.
• Eyes are now on ECB President Christine Lagarde next Thursday, with investors already gearing up to her policy stance amid a global rise in inflation and continuing policy tightening among other central banks. Rates are expected to remain unchanged up to 2023.