According to Credit Suisse Economics Research team, QE in the euro area remains on the table:
- We believe there is little reason to wait beyond January for an announcement.
- Unanimity for QE is not needed but Draghi is looking for broad ECB Governing Council support. This is forthcoming. We assess recent statements of all ECB members and find the majority in favour of broad asset purchases with even well-known past hawks sounding more conciliatory.
- Strong reasons speak in favour of a January QE announcement even if in December Draghi also brought the March meeting into play. By 22 January the ECB will have more evidence that its balance sheet is going nowhere and that HICP inflation and importantly, inflation expectations, continue declining.
- The European Court of Justice will also have delivered its non-binding ruling on the ECB's OMT and with ECB voting starting to rotate from next year onwards we find that the January Governing Council is likely to be marginally more dovishthan that in March.
- QE details might only be announced after the January meeting but once they emerge they might surprise on the high side. The ECB is aware that larger sovereign bond purchases are required given their relatively smaller impact since impact and volume are inversely related with how impaired purchased assets are.
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