Euro area is expected to post a sluggish growth rate in 2016. Rising non-performing loans, higher corporate and private debt, lack of significant economic reforms, and downward trend in housing prices in Italy and France hints weak economic momentum in the euro zone. The economy is expected to grow at 1.3%, and core inflation rate would be at 1% in 2016, estimates Commerzbank.
Since weaker economic growth rate is foreseen in the euro area next year, the central bank may opt for further monetary easing.
"We envisage a further reduction of the deposit rate by 0.1 percentage points to -0.4%, possibly at the March meeting. In addition, the ECB could again push the earliest date for an end to asset purchases beyond the current date of March 2017", says Commerzbank in a research note.
