ECB likely to lower its inflation forecast next week

More clarity on the ECB's view on inflation should come from its 3 September meeting. As for the latest forecasts published in June, the ECB sees inflation averaging 0.3% this year, 1.5% in 2016 and 1.8% in 2017. 

"However, the notable developments in the world markets since the June meeting (ie, ongoing weakness in the oil and commodities markets, yuan devaluation, rising concerns on China's economic growth and euro strengthening) should put significant downward pressure on the ECB's inflation forecasts", says Barclays. 

In this respect, on 26 August, in an interview ECB Board member Peter Praet indicated that recent developments in the world economy and commodity markets increased the risk for achieving a sustainable inflation path towards 2%. 

He also emphasised that there should be no ambiguity on ECB's willingness and ability to act by adjusting the size, composition and/or the length of its QE programme.