ECB to hint strongly at QE and ultimately deliver

The ECB finally seems to be facing facts, withPresident Mario Draghi conceding at Jackson Holethat the economy is too weak and that inflationexpectations have dropped. We do not expect anyaction this month as the Bank clings to the hopethat measures announced in June will boost theeconomy and generate inflationary pressure. ButMr Draghi is likely to provide stronger reassurancethat the ECB is prepared to do more if needed. Andwith the economy and the Targeted Longer-TermRefinancing Operations (TLTROs) set todisappoint, we still see it announcing full-blownquantitative easing at the end of this year.