Draghi May Send Dovish Signals at Policy Meeting to Temper Market Expectations

Strong euro bullish sentiment in the option market, falling inflation expectations, renewed rout in global equities and the extended slump in oil prices may force the European Central Bank's president Mario Draghi to deliver a more dovish-than-expected message at the ECB policy meeting this week, Bloomberg strategists Vassilis Karamanis and Richard Jones write.

Compared to the meeting on December 3, when Draghi delivered a stimulus expansion that fell short of market expectations, the ECB this week may need to decisively re-affirm the 'all it takes' stance to ward off possibility of further euro strength and downplay fears of falling prices.