Europe’s feeble economy will get another shot in the arm Thursday when Mario Draghi is expected to unveil an interest rate cut and even more money printing.
The move has been telegraphed. The only question is just how bold a step the European Central Bank will take to get growth rates and prices moving higher again.
Since ECB President Draghi signaled that a new wave of stimulus measures was on its way in October, eurozone growth has slowed again and inflation hasn’t moved — bolstering the case for action.
Most investors are expecting the ECB to cut its deposit rate even deeper into negative territory, and to print at least another 500 billion euros ($530 billion). The ECB will use the new money to buy government bonds and other securities.
The aim: encourage banks to lend more cash to households and companies, while making it cheaper for businesses to borrow.
“We think the [ECB] will increase monthly asset purchases from the current 60 billion euros to about 70 billion, effective January 2016, and extend this pace to at least March 2017,” wrote Pimco’s Andrew Bosomworth earlier this week.
The central bank’s current stimulus program — known as quantitative easing — was launched in March. Back then, Draghi said the effort would run at least until September 2016, giving it an initial value of 1.1 trillion euros.