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ECB not expected to announce additional measures - Nomura

FXStreet (Bali) - Nick Matthews, Economist at Nomura, is not expecting the ECB to announce any additional measures at its meeting on Thursday.

Key Quotes

"We do not expect the ECB to announce any additional measures at its meeting in Naples. Nonetheless, we expect the Governing Council to maintain a clear bias towards further action, if necessary. This will be via an expression of the intent to use additional unconventional instruments and alter the size and/or composition of its unconventional interventions should it become necessary to further address risks of a too prolonged period of low inflation."

"Away from asset purchases, we expect the ECB to remain concerned with the loss of momentum in the business cycle and to see clear downside risks to the economic outlook. Overall, we expect Mr Draghi to keep the threat level of further action as elevated as possible, in order to try and maintain pressure on the exchange rate and keep inflation expectations – which remain under pressure - in check."

"We continue to judge the probability of a broad-based asset purchase programme (QE) at 40% this year and 45% by March next year, while risks around these probabilities remain skewed to the upside."

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