The ECB convenes once again, and this time we could get some hints about action in December. Will the ECB expand or taper QE? Here is the preview from Bank of America Merrill Lynch:

Here is their view, courtesy of eFXnews:

Our base case is that the ECB will confirm that tapering “has not been discussed” and we expect President Draghi to emphasize, as he did at the IMF press conference last weekend, the ECB’s intention to preserve the ECB’s” necessary” and “very substantial” amount of monetary support. We also expect him to highlight that inflation has to return to target “without undue delay” – an expression which is already in the prepared statement but should get more prominence. The tightening in monetary conditions since tapering talk began provides an insight on what would happen if the ECB actually decides to taper from March 2017 onwards. This is why we expect Mario Draghi to be quite dovish this week, though action will likely have to wait until December 8.

We don’t expect Draghi to elaborate much on the instruments, because we think the Governing Council is not through its review of the various options. We still expect the ECB in December to prolong QE until September 2017 at the current EUR80bn pace, and we also think that this will entail tweaking the capital key. Indeed, we think it’s the only credible way to deliver on what seems to be the apparently conflicting twin objectives of the ECB at the moment: keeping long term rates in positive territory without reducing the overall degree of stimulus. A weak form consists of getting the Bundesbank to buy more substitution assets (supras) and less Bunds, which, combined with raising the issuer limit to 50% would be enough to bring us until September. A stronger form would allow the purchasing allowance of NCBs hitting scarcity walls to be redistributed across the other NCBs. The strong form is our base case at this stage, but with a low level of confidence. We see a significant risk that all we get is weak form, given the politically controversial nature of such move.