The ECB’s Ewald Nowotny is sticking to the message from Draghi yesterday in that:
1) QE is flexible with a range of possibilities on the time frame and volume of QE, and
2) a further expansion in policy is possible, but it is not clear if it will be necessary.
We are likely to see other ECB officials also stick to the script over the coming days and we continue to feel that the case for further QE will become clearer by the time of the December ECB meeting.
The question is whether the ECB decides to delay an announcement until the start of the New Year as markets are likely to be quiet/illiquid into year-end.
What is clear is that the near-term inflation outlook will help to support further QE as well as longer-term inflation forecasts as the ECB will once again stress that its actions are dictated by a desire to achieve its mandate.
