Draghi May Create Christmas Magic With QE Extension

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European Central Bank President Mario Draghi will likely announce an extension of asset purchases by the central bank beyond March 2017 on Thursday, hoping to spread some Christmas cheer amid the high political uncertainty, especially after the ‘no’ vote in the Italian referendum last weekend.

The 25-member Governing Council is widely expected to leave interest rates unchanged for a sixth straight session but extend asset purchases of 80 billion euros a month by six months till September. That way, Draghi can play Santa, giving markets what they expected.

Last Christmas saw him play the Grinch, when he whipped up market expectations of stimulus in the run up to the December policy session but came up short.

The main refi rate is at a record low zero percent, the deposit rate at -0.40 percent, and the marginal lending facility rate is at 0.25 percent. The three rates were previously…

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