Week ahead: ECB to boost QE and cut deposit rate, analysts predict

European Central Bank President Mario Draghi is in the spotlight next week as analysts anticipate he will announce big changes to policy to address prolonged low inflation.

The ECB’s Governing Council is expected to cut the deposit rate and to introduce further quantitative easing when it publishes its policy decision next Thursday.

Amid low inflation, concerns about the stagnant Eurozone economic recovery and worries about the potential impact of the slowdown in emerging markets, the ECB has been under mounting pressure to take action.

In light of the challenges, policymakers were said to have been considering options such as staggered charges on banks hoarding cash, according to a Reuters report earlier this week.

“We have changed our view and now expect the ECB to cut the deposit rate by 20 basis points (previously 10bp) accompanied by a two-tier deposit rate system,” said Dankse Bank analysts.

“Our changed view reflects that none of the ECB members have argued against the aggressive pricing of more than a 10bp cut together with this week's Reuters' article suggesting the ECB is considering a larger deposit rate cut.”

The analysts added that they see no change to interest rates but anticipate the ECB will expand QE purchases to €75bn per month until December 2016, past the originally intended September deadline.

Societe Generale predicts the ECB will cut the deposit rate by 10bp, drop the reference to September 2016 as a possible end-date of QE, along with an increase of €10-20bn in monthly asset purchases, including corporate bonds. The bank also reckons an extension of targeted longer-term refinancing operations is on the cards.

“Crucially, we look for signs that the ECB will have sufficient volumes of assets to purchase even as the programmes are extended, by signalling its willingness to venture into new asset classes - we expect corporate bonds to be added now and possibly regional government debt later,” said SocGen analyst Anatoli Annenkov.

“It may also take the opportunity to set the deposit rate as close as possible to their current view of the ‘effective’ lower bound, depending on the combination of measures, while introducing a two-tier charge on excess liquidity.

Annenkov noted that expectations of policy changes were high so the risk of disappointment was also high.

However since “concerns are correctly focused on the structural headwinds to the inflation outlook (not due to external downside risks in our view), there is really no point in holding back or saving ammunition at this stage”, the analyst said

Monday 30 November

INTERIMS

Cranswick, Great Eastern Energy Corp Ltd. GDR, KCOM Group, Omega Diagnostics Group

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Action Hotels, BAE Systems, BlackRock Smaller Companies Trust, Bloomsbury Publishing, Capita, ITV, RTC Group, Senior, Trinity Mirror

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City of London Inv Trust, F&C Commercial Property Trust Ltd., Picton Property Income Ltd

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All Leisure Group, Ascent Resources, Bango

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Intelligent Energy Holdings, Quoram

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Baillie Gifford Japan Trust, Feedback, Ferrum Crescent Ltd NPV (DI), Fidelity Asian Values, Manchester & London Investment Trust, Nyota Minerals Ltd., Petra Diamonds Ltd.(DI), Scotgold Resources (DI), Victoria Oil & Gas

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Tuesday 01 December

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Collagen Solutions, GB Group, Northgate, OPG Power Ventures, Park Group, Private & Commercial Finance Group

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JPMorgan Claverhouse Inv Trust

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Schlumberger Ltd.

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JSC Acron GDR (Reg S), PJSC Novorossiysk Commercial Sea Port GDR (Reg S), TCS Group Holding GDR (Each Repr 1 A Shr) (Reg S)

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Atlas Development & Support Services Limited

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Character Group, Gooch & Housego, ITE Group, Sanderson Group, Topps Tiles

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Aberdeen Asian Smaller Companies Investment Trust, Wolseley

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Merlin Entertainments

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Wednesday 02 December

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Greene King, International Greetings, Iomart Group, Telford Homes, Tricorn Group

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Beige Book Fed Survey (US) (19:00)

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Telit Communications

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Brewin Dolphin Holdings, Impax Asset Management Group, Numis Corporation, Sage Group, Urban&Civic , Zoopla Property Group (WI)

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Nokia OYJ

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Bioventix, Firestone Diamonds, Gemfields, Jubilee Platinum, London Finance & Investment Group, Matchtech Group, Purecircle Limited (DI), Vernalis plc

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Thursday 03 December

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Clipper Logistics , IMImobile , Market Tech Holdings Limited , Mercia Technologies , Smith (DS), WYG

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B&M European Value Retail S.A. (DI), Baronsmead VCT, Caledonia Investments, Charles Stanley Group, Creston, Croma Security Solutions Group, De La Rue, Downing Four VCT DP2011 Low Carb, Downing Four VCT DP2011 Str, Downing Four VCT DP2011Gen, Electrocomponents, Establishment Inv Trust, First Property Group, Foresight 4 VCT, Fuller Smith & Turner, GLI Alternative Finance , Headlam Group, Helical Bar, Hogg Robinson Group, IS Solutions, JD Sports Fashion, Kainos Group , LondonMetric Property, Management Consulting Group, Norcros, PayPoint, Record, Royal Mail, Sepura, Severn Trent, Shanks Group, Tarsus Group, Telecom Plus, TR Property Inv Trust, Triple Point Income VCT, UK Mail Group , ULS Technology , Value and Income Trust, VP

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Alpha Real Trust Ltd., Bank of America Corp., Duet Real Estate Finance Ltd, Land Securities Group, Premier Energy & Water Trust

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Q4

GW Pharmaceuticals

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Jupiter European Opportunities Trust, Northern Petroleum, Pembroke Vct

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Elegant Hotels Group , Impax Asset Management Group

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Manchester & London Investment Trust

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Minera IRL Ltd.

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Advance Frontier Markets Fund Ltd, ASOS, AXA Property Trust Limited, Egdon Resources, Haydale Graphene Industries, Powerhouse Energy Group, Quoram

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Amino Technologies

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Friday 04 December

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Berkeley Group Holdings (The)

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Goals Soccer Centres, IFG Group, Laird, Marshalls, Mission Marketing Group, SABMiller, Scottish Mortgage Inv Trust, Stobart Group Ltd., William Hill

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ANNUAL REPORT

Diploma

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Aberdeen Asian Smaller Companies Investment Trust

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Associated British Foods, DFS Furniture, Green Reit, Kalibrate Technologies, Physiomics

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New Car Registrations (09:00)

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Abcam, Aberdeen Asian Smaller Companies Investment Trust, Ashmore Group, Genus, James Halstead, NWF Group, Swallowfield, Toro Limited