The European Central Bank will end its bond-buying programme in less than three months, with a low likelihood of an extension despite a cocktail of political and trade concerns, economists unanimously said in a Reuters poll.
Having bought more than 2.6 trillion euros worth of mostly government bonds since March 2015, the ECB has been slowly trimming back its purchases, hoping it has already done enough to bolster growth and inflation.
The gradual reduction in the amount of monthly stimulus has persisted even with plenty of evidence that euro zone growth momentum peaked a long while back, and with additional economic and political risks mounting.
Still, all 70 economists who answered an additional question in the latest poll, taken before the Italian cabinet was due to meet on Monday to discuss its 2019 budget, said chances that the central bank would extend its bond buying programme were low.
Italy's cabinet was expected to approve on Tuesday the budget, which envisages a jump in the deficit that has upset financial markets.
The latest Reuters poll of more than 80 economists taken on Oct 9-15 also found that euro zone inflation would languish below the central bank's target until at least 2021.
"The essence of the ECB's strategy is a gradual end of the net asset purchases of QE by the end of the year and possibly a first rate hike in September or October next year," said Carsten Brzeski, chief economist at ING.
"However, it is currently far too early to answer these questions. Why should the ECB unnecessarily commit itself? As illustrated by the current market turmoil, and doubts about the strength of the global economy, too much can happen between now and the end of summer 2019."
Minutes from the central bank's September meeting released on Thursday showed ECB policymakers remained optimistic.
With euro zone inflation forecast to average just 1.7 percent this year, next and in 2020, below the ECB's 2 percent target ceiling, the central bank was still expected to raise interest rates in the second half of next year.
The deposit rate will rise 15 basis points to -0.25 percent in the third quarter and the refinancing rate to 10 basis points from the current zero percent in the final quarter of 2019, according to the latest poll.
"The ECB is next due to provide further details on its reinvestment process and perhaps update its forward guidance and we expect it to sound dovish, but stay short of indicating that it will actively try to lengthen the duration of its purchases during the reinvestment phase," noted Ebrahim Rahbari, director of the global economics team at Citi in New York.
"And despite a few recent hawkish noises, it remains very unlikely that the ECB would consider a rate hike before September 2019."
In the meantime, private business surveys suggest the escalating trade war is already hurting factories across the euro zone, with the September reading showing overall business activity slowing to a four-month low. [EUR/PMIS]
The euro zone economy is expected to grow at a steady 0.4 percent rate every quarter through to the end of next year.
Growth will average 2.0 percent this year, slightly lower than the 2.1 percent predicted last month, the consensus showed. That was in line with the International Monetary Fund's growth projections, which downgraded its view from July on a weaker performance by major euro zone countries.
Euro zone economic growth is seen at 1.8 percent next year and at 1.6 percent in 2020, both unchanged from the previous poll.
When asked about the likelihood of a euro zone recession in the next year, the median of 43 economists was 15 percent. For the next two years, the figure was 25 percent, unchanged from August's poll.
Findings in the latest Reuters polls were not very different for top economies in the region. Economists cut their growth outlook for Germany, France and Italy from a July poll.
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