The European Central Bank (ECB) head Mario Draghi is planning to inject a new stimulus package to boost economic growth and inflation before the end of his eight-year term.
The ECB is expected to push back a key interest rate while taking other initiatives, such as purchasing bonds to infuse newly created money into the region's economy. Some ECB officials expressed uncertainty over the proposed stimulus as Draghi holds his second-to-last meeting as  head of the monetary authority for the 19 countries using the euro.
In a speech in June and following the central bank's last meeting on July 25, Draghi hinted that more steps will be taken to address the economic growth slowdown, which was partly attributed to the U.S.-China trade war that caused uncertainty among companies globally.
According to ECB analysts, the rate cuts on commercial bank deposits will be further lowered from the current minus 0.4% to minus 0.5% or even minus 0.6%. This is aimed at pressuring banks to lend spare cash rather than let them sit at the central bank. This signals the stretched nature of monetary policy following the Great Recession.
The central bank could also opt to extend its pledge not to increase rates before mid-2020.
The ECB is also looking to resume its purchase of bonds, which were halted in December 2018. Florian Hense, an analyst from Berenberg bank, pointed out that around 30 billion euros or $33 billion in government and corporate bonds could be purchaased by the ECB monthly in the next 12 months.
For almost four years, the ECB has purchased 2.6 trillion euros in bonds, which resulted in increased bond prices and lower interest yields. Government bond yields across Europe has fallen below zero as more purchases are anticipated, indicating that governments get paid to borrow while investors are willing to pay for a safe place to park their money.
