Mario Draghi in focus as slide disrupts ECB forecast

Mario Draghi may have to up the ante, and he has oil to blame. More than 60% of economists surveyed by Bloomberg predict the ECB president will announce more stimulus this year, up from 40% in December, after a renewed oil-price slump depressed the outlook for eurozone inflation.

Four in seven of those say Mr Draghi will expand monthly bond-buying from the current €60bn, while 53% forecast another cut to the deposit rate.

Since the ECB started quantitative easing 10 months ago, prices have barely risen and the time frame for returning inflation to the central bank’s goal of just under 2% has twice been extended.

The ECB governing council will meet on Thursday in Frankfurt after already showing itself to be divided on the right policy approach, raising the pressure on Mr Draghi to convince his watchers that he can still deliver on his mandate.

“If oil prices remain at current depressed levels, the ECB will probably not just sit, wait and hope for the best,” said Holger Sandte, chief European analyst at Nordea Markets in Copenhagen. “We could see more easing as early as in March.”

The ECB will publish updated forecasts at its March meeting, where any downgrades could provide the justification for more action.

Economists in a separate survey predict the central bank will keep all interest rates unchanged this week.

In early December, Mr Draghi cut the deposit rate to -0.3%, extended asset purchases to at least 2017 and pledged to reinvest the principal of maturing bonds to prevent low price growth from becoming entrenched.

The package fell short of investors’ expectations, pushing up the euro and sparking a rout in equities and a rally in bonds.

A drop of almost 40% in the price of crude since then has cast a shadow over the ECB’s most recent inflation forecast.