FRANKFURT, Germany — Investors will sift European Central Bank head Mario Draghi’s remarks on Thursday for clues about a possible extension of its 1.74 trillion euro ($1.91 trillion) bond-buying stimulus program.

Most analysts seem to think that while the ECB will keep its policies on hold at its meeting, Draghi will leave open the possibility of an extension to the bank’s bond-buying program, which is meant to increase lending, growth and inflation.

They think the ECB will wait at least until December’s meeting to make any decision on the program’s future.

Here are five things to watch for Thursday.


The ECB’s current stance is that its bond-buying stimulus program will continue at least through March 2017, and in any case until inflation turns convincingly upward. That fuzzy end date leaves open just when the stimulus will end, and how.

There are different predictions out there. Ben May, lead eurozone economist at Capital Economics, sees only a 15 percent chance that the stimulus will be continued at its current amount after March. He sees a 40 percent chance that December’s meeting will see the ECB announce its intentions to taper the purchases after March.

By contrast, Howard Archer, chief European and UK economist at the IHS Markit analytical firm, says any tapering “looks some way off.”

He predicts the ECB will extend for six months beyond March and keep the purchases at 80 billion euros per month.


Recent economic data hasn’t been so bad in the 19 countries that use the euro. The key indicator for the ECB — inflation — has even ticked up a bit, to an annual 0.4 percent. That’s the highest in 23 months, and far better than the subzero readings encountered over that stretch.

But inflation remains far below the bank’s goal of just under 2 percent, a level considered consistent with a strong economy. Growth is modest, at 0.3 percent in the second quarter, and unemployment still painfully high at 10.1 percent — and falling only slowly.

ECB officials expressed concern at their last meeting that inflation hasn’t turned upward convincingly. That’s despite all the stimulus efforts aimed at making it do that — a zero benchmark interest rate, plus the monthly bond purchases that pump newly printed money into the financial sector.

At their last meeting, on Sept. 8, the bank’s leadership thought it was important to keep the current level of stimulus. That would argue against any move to taper the bond purchases now.


The ECB will have new inflation estimates compiled by their staff in December, which would give them a clearer rationale for any action then, as opposed to Thursday.

In the meantime, it may be in Draghi’s interest to tamp down expectations for more central bank stimulus. That has the effect of increasing the impact of any later announcement. Conversely, it lessens the disappointment if the bank doesn’t wind up taking action.

“Draghi will be wary of over-promising and will probably reiterate comments that no decision on the form of future action has been reached,” writes Oxford Economic analyst May.

“December’s likely policy pronouncement will depend on the tone of the data over the next few weeks.”


Analysts say it’s unlikely the bank will change any of its extremely low interest rates Thursday. The refinancing rate, a key benchmark that sets the costs of borrowing ECB funds for commercial banks, is at a record low of zero. The deposit rate on money left at the ECB overnight by banks is at minus 0.4 percent. That makes it, in effect, a tax on banks that leave spare cash with the ECB. The central bank is pushing them to lend the money instead.

Low rates have been eroding bank profits, and banks are another worry for the ECB. Some of them are too weak to expand lending and help the economy grow. Extremely low rates compress the margin between what banks pay to borrow and what they earn in interest on loans. That margin is how they make money.


One key topic to listen for is what the ECB says about its efforts to make sure it can find enough bonds to buy. There have been concerns it might eventually run out and be unable to extend the stimulus as long as it wants to. Draghi said in September that bank committees were working on “options that ensure a smooth implementation of our purchase program.”

Analysts say the bank could find more bonds by tweaking the rules of the program. Right now there are limits by issue and by bond issuer; it also won’t buy bonds that yield less than its minus 0.4 percent deposit rate on money left with it by commercial banks. It could also look for different kinds of financial assets.

However, the more it strays from the purchase limits or from safer investments, the more the governing council is likely to see opposition from the stimulus skeptics in its ranks.