Extension likely for ECB's asset purchases

The euro area is likely to show resilience in the short term, helped by robust consumption (due to stronger real disposable incomes and improving labour markets) and continued recovery in exports to the US. 

"Only in early 2016 will it be clearer that a "normal" recovery with stronger investment will struggle to take shape and thus the ECB in its March 2016forecasts,  is expected to abandon the hope of reaching "close to 2%" inflation in 2017", says Societe Generale. 

This will be its first attempt to forecast inflation in 2018, which is likely to be close to 2%. When doing so, the ECB will, implicitly or explicitly, send a signal that asset purchases will continue beyond September 2016. 

"In order to maintain support for investment and the corporate sector, the ECB is also expected to announce a continued TLTRO programme (maturing in 2019) andadd purchases of corporate bonds, probably also in March 2016", added Barclays.

The recent increase in the issue share limit has released some €320bn of available sovereign bonds, which gives the ECB flexibility to "top up" current purchases if needed.