Analysts say that the European Central Bank (ECB) may increase asset purchases to 80 billion euros because the economic recovery is not "at the required level."
European markets have set their eyes on the ECB's interest decision to be announced tomorrow. The ECB is expected to continue its expansionary fiscal policies as the economic recovery in Europe continues to fall short of the desired level.
Chief European economist from Capital Economics, Jonathan Loynes, estimated that the ECB will be increasing its asset purchases to approximately 80 billion euros from 60 billion euros, the current level. "However, the main question that remains is whether the ECB will take any steps to further monetary expansion and whether such an increase will be adequate," added Loynes. He further said that a discount in interest rates is possible, however, this would cause disappointment in the markets.
UniCredit's Eurozone Chief Economist Marco Valli projects that the ECB will increase asset purchases to 75 billion euros and added that until 2017, the ECB will not be decreasing its asset purchases.
ING Group's Senior Economics for Germany and Austria, Carsten Brzeski, further said that the ECB might increase monetary expansion and along with offering few measures, it may also decrease the interest rates.
