RTE: ECB to extend QE beyond September 2016 to battle low inflation - poll
The ECB is predicted to officially extend its asset purchase programme beyond September 2016 in yet another attempt to drive up inflation and rekindle growth, a Reuters poll found.
Launched just six months ago, the €60 billion a month sovereign bond buying scheme was originally set to end a year from now.
It has so far failed to pull inflation meaningfully higher or even weaken the euro for a sustained period.
After the financial market rout in August, triggered by concerns China's economy is slowing rapidly, speculation the ECB would ease policy again started to mount - especially with the central bank's policymakers suggesting such a move.
ECB President Mario Draghi signalled as much at a news conference after last week's monetary policy meeting.
Most economists in the survey predicted he would eventually announce a new end-date for the quantitative easing programme
Many others said the ECB would extend the programme and increase the amount of monthly purchases at the same time, while a few forecast the programme would be increased in size only.
At a time when expectations are high for a US interest rate hike from the Federal Reserve soon, followed by Britain early next year, the ECB is faced with a weak economy that is plagued by very little domestic demand and is hardly generating inflation.
But what benefit an enhanced QE programme, either in duration or size, would have is still unclear.
Japan has pumped trillions of yen into the economy through various stimulus programmes for over a decade but inflation showed signs of rising only recently and remains far from what policymakers want to achieve.
The Reuters poll showed euro zone inflation would rise slightly in the last quarter of this year to 0.5% from August's 0.2%.
Next year it is expected to average 1.2% before rising to 1.6% in 2017. That 2017 inflation consensus is slightly lower than the ECB's forecast of 1.7% and shy of its target of close to but below 2%.
The most pessimistic economist forecasts inflation at 1.1%, barely more than half the ECB's target at that time.
Global oil prices, which have fallen 8% since the start of August after an already historic slump over the last year, and a steadily strengthening euro hardly make the case for a spike in inflation.
That, and a sharp slowdown in China is likely to pressure euro zone economies well into the future.
The poll also showed the euro zone economy would expand 0.4% in each quarter from now until the end of next year, exactly the same as expectations last month.
