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The report comes a week before the ECB’s monthly policy meeting at which officials will present revised economic forecasts. President Mario Draghi has said inflation needs to be boosted “as fast as possible” and explicitly cited government bond buying as a potential tool. He has ordered staff to produce a range of asset-buying options beyond the purchases of securitized debt already under way.
Lower ECB forecasts would increase “the likelihood that there could be some promise of additional action at the next meeting,” said Richard McGuire, head of European rates strategy at Rabobank International in London. “It’s probably a little bit premature to consider that that would include QE but certainly either some indication that QE is in the offing or a more official recognition that government bond purchasing is possible.”