More ECB QE in the pipeline

The ECB is likely to announce a QE extension beyond September 2016. That could be done during the policy meeting on 3 December, but the ECB might not yet see a need to do it just two weeks ahead of an FOMC meeting where the Fed might probably raise rates. 

An announcement on the programme extension early next year thus looks somewhat more likely. Roughly a half-year extension of the programme combined with an additional tapering period looks like a good first guess on how the purchase programme could evolve beyond September 2016.

"The risks are clearly tilted towards even more aggressive measures. The ECB's Nowotny recently reminded that the ECB was clearly missing its inflation target, also as far as the core rate was concerned, while Vice-President Constâncio has said that as the ECB's QE programme is relatively small compared to those seen in the US, Japan and the UK, there is scope to do more", says Nordea Bank.

In addition, a further delay in the Fed's rate hike plans would add pressure on the ECB to actually expand the programme, not just extend it. In short, the ECB's October meeting is for watching. Draghi's message will be dovish, but it's not time to act yet.