Draghi will be dovish, but ECB nearing its limits

President Draghi will respond to German politicians’ recent criticism of the ECB’s ultra-loose policy at the meeting on 21st April by reiterating the Bank’s independence and stressing that more support is still possible. But it seems clear that it is nearing the limits of what it deems acceptable. As growth remains weak and inflation far below target, we still see the Bank lengthening its QE programme in time. But while we would not rule out more radical policies such as helicopter money, the conservative ECB is highly unlikely to take such a bold step anytime soon, implying that the inflation target will remain out of reach.