A number of prominent ECB members have spoken today and some of the comments were interesting in terms of what to expect of the ECB go ing forward.
ECB president Mario Draghi strengthened expectations for more broad - based QE as he said than an expansion of the purchase programme could include government bonds. Moreover, he repeated that the ECB expects its balance sheet to increase to the size it had at the beginning of 2012 a nd that the Governing Council is unanimous in its commitment to use unconventional measures should it become necessary. However, Draghi also said that the ECB expects the current measures will have a sizeable impact on the balance sheet and that time is ne eded for the stimulus to reach the real economy.
Hence, it seems that the ECB would need to be surprised by a low up - take on the December TLTRO before more easing is announced , and we expect the ECB will remain in a wait - and - see mode at the ECB meeting in December. Nevertheless, we believe it will be difficult for the ECB to expand the balance sheet to the EUR3trn target and we expect the ECB to reach for more tools in early 2015.
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