The European Central Bank's meeting due next week is unlikely to see any policy action; however, the central bank is under increased pressure to further ease policy in 2016 due to the worsening outlook of inflation.

"We remain neutral on outright duration, as the risky asset price action is likely to remain volatile in the near term", says Barclays.

The central bank had lowered its repo rate by 10bp and extended its quantitative easing in December 2015. Moreover, the ECB had also expanded into sub-sovereign debt. The central bank is now expected to adjust QE as early as March meeting. The tweaking of QE can happen due to the declining of economic backdrop caused by external developments or if the central bank alters certain QE technicalities as part of its semi-annual review in March or April.