The odds of unsterilized large-scale asset purchases - i.e., LSAPs, i.e., QE - from the ECB have pushed past 50:50 says Citi;s Guillaume Menuet, and the program could begin as early as September.
How? Citi's team expects the ECB to buy both public and private-asset classes, with a majority likely to be things like sovereign bonds. As for size, Citi sees a bare minimum being €1T. This compares to the BoE's £375B program and the Fed's current pace (amid the taper) of $55B per month.
Don't look for action before September, though, says Menuet, as the ECB will likely wait and see if easing at the June meeting begins to do the trick of bringing inflation back up towards its 2% target. Will it work? "While it will likely be on a scale large enough to excite financial markets, we are doubtful it will be on a scale large enough to transform the economic outlook from an extended period of low inflation and low interest rates.”