Inflation hopes dim despite ECB plans

Days before the European Central Bank is expected to deploy its ultimate monetary easing weapon, financial markets are showing no sign of confidence that it will push inflation anywhere near target in the next decade.

The ECB is expected to launch a programme to print hundreds of billions in new euro by buying government bonds as soon as Thursday, with the explicit aim of boosting inflation. Yet market-implied inflation expectations have fallen relentlessly.

The major driver has been a nearly 60% drop in oil prices since June, hitting the cost of a wide range of goods and services and taking investors and policymakers by surprise.