ECB in danger of slipping behind

The euro-zone economy as a whole might be faring better than others for now, but strains in the region’s periphery have continued to mount. The ECB will provide reassurance after its forthcoming meeting that it will continue to support these economies with unlimited lending to commercial banks. It might even hint at a renewal of its earlier peripheral bond purchase programme. For now at least, any purchases will be small, targeted and sterilised, meaning that the Bank will abstain again from the second bout of quantitative easing that seems likely elsewhere. But as core economies weaken along with the periphery, the ECB might be forced to take more drastic action in future.