- Jonathan Loynes, chief European economist at Capital Economics
The European Central Bank is unlikely to increase the size of the 1.46 trillion euro asset-purchase programme in 2016 despite ECB President Mario Draghi comments that additional monetary stimulus is still on the table, according to an annual Financial Times poll. Unlike the previous year when the overwhelming majority of economists predicted the central bank to deploy full-scale quantitative easing, just under half of respondents expected the ECB to do nothing this year. The rest argued that the central bank would enlarge QE or lower interest rates. Still, some of those who anticipated more easing highlighted that the central bank was unlikely to radically change its current policy response. Meanwhile, ECB executive board member Yves Mersch said that monetary policy could be more accommodative in order to help achieve the inflation target. Mersch also added that QE programme will run for as long as it is needed to sustainably reach ECB's targets.
Latest ECB estimates show the Euro zone economy is likely to grow 1.7% in 2016 after expanding 1.5% this year as QE supports the region's economy. Yet, inflation has been below 1% for more than two years, whereas the ECB targets consumer prices of below but close to 2%.
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