Mario Draghi, the president of the European Central Bank (ECB), is set to reveal details of a reduction in monetary stimulus Thursday in what could be the most eventful meeting of the central bank this year.
The expectation for this week's ECB meeting are very clear: Nothing less than the big "taper" plan for next year is expected from Mario Draghi. The big question though still is: How much will the ECB reduce the run rate of their asset purchase program and for how long will they extend it?
"We expect the ECB to announce next week (October 26) that it will cut its monthly asset purchases from 60 billion euros ($70.5 billion) to 30 billion euros as of January, with a commitment for nine months, i.e. until end-September 2018," said Reinhard Cluse, the chief European economist with UBS, said in a note.
"We think the ECB will leave open whether it will extend QE (quantitative easing) after September and hint that this decision will be taken in a data-dependent fashion, closer to the time."
That's the consensus view with some analysts even expecting a reduction — a so-called taper — to 25 billion euros with a longer extension until the end of 2018. Key in the ECB's thinking is the total volume of future purchases as there are estimates that only 250 billion euros to 300 billion euros of eligible assets are left to buy for the central bank.