As market participants await the European Central Bank’s next meeting, analysts from Nomura says there is a high chance the central bank will implement quantitative easing in Europe on Thursday. “[W]e continue to expect the ECB to announce a large-scale asset purchase programme including sovereign bonds on 22 January (75% probability, revised up from 60% previously), in response to increased deflation risks and the ongoing de-anchoring of inflation expectations,” say the analysts. However, they add that the ECB’s move may not be enough to control the deflationary issues in the region. “We doubt balance sheet expansion can be substantial or timely enough against rising risks of too-low inflation,” they say.
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