Amid heightened expectations of yet more stimulus from the European Central Bank (ECB), one economist is predicting that a Federal Reserve-style quantitative easing (QE) program could be unleashed as early as next week.
After promising an as yet unused bond-buying program back in 2012, ECB President Mario Draghi has been busy cutting interest rates and giving out cheap loans to euro zone banks. In early September he unveiled a slew of stimulus measures which effectively added 1 trillion euros ($1.29 trillion) into the euro zone's flagging economy, according to some analysts. Draghi is still pondering whether to launch a Fed-style government bond purchase program, however, and has used a series of public appearances this week to hint at the prospect.
Currency traders seem convinced of the central bank's willingness to act - with the euro hitting a near-two-year low on Thursday morning - but equities had a modest start to the session on Thursday, slowly drifting higher after a mixed open.
However, with Draghi becoming an expert in the world of central bank speak, where words are sometimes used at the expense of solid action, some market-watchers have been left second-guessing as to when the bank could be looking to move, if at all.
"The problem with Draghi is he is the central banker that cries wolf so it's unlikely that he will be able to levitate markets with the same story again," Marius Paun and Jonathan Scudaria, two dealers at spread betting firm Capital Spreads, said in a morning note.
Antonin Jullier, global head of equity trading strategy at Citi, believes that equity traders have been completely discounting what Draghi has been saying this summer and not believing his willingness to act with new measures.
"Experience though tells you that if you put a trillion on one side, things tend to trade better. Assets in general and not just equities," he told CNBC Thursday.
When is QE coming?
Global sentiment is so focused on events in Frankfurt that U.S. and Asian markets pushed higher on Wednesday and overnight Thursday and took a lead from Europe. Some traders in the region might still need convincing QE can push stocks higher but nonetheless many high profile investment banks are now adamant that this extra liquidity is on the horizon.