The European Central Bank announces its last policy decision of the year on Thursday and while analysts don’t expect major surprises, there are still key issues that could stir financial markets. The central bank in October announced plans to wean the eurozone off billions in monetary stimulus, saying it would halve its aggressive bond-buying program to €30 billion from €60 billion starting in January. The quantitative-easing program is now set to run until at least the end of September next year, depending on the inflation outlook. On the heels of that announcement, traders are looking for more hints on interest rates and whether stimulus measures will be further tapered after September. Here are three things to watch at Thursday’s ECB gathering that could offer clues on those developments: 1. New staff forecasts on GDP growth and inflation Quarterly staff projections are released at the Thursday meeting and analysts expect a bump up in both economic growth and inflation expectations. Since the last set of forecasts were released in September, the eurozone economy has picked up steam, with survey data putting the region on course for its strongest quarterly expansion since the start of 2011. Markit The ECB will publish its first estimates for 2020, which will give a sense of how close inflation in 2020 will get to the ECB’s target of “below, but close to 2%”. That could indicate when the central bank will start to a path to its own policy normalization, which would include raising rates and unwinding its QE. Inflation in November stood at 1.5%, according to Eurostat. “We expect a forecast of 1.8% [for 2020]. That would pave the way for a gradual scaling back of the ECB’s stimulus in line with its current guidance. A number below 1.8% would raise the risk of an extension of asset purchases beyond September 2018. This looks unlikely, though,” said Florian Hense, economist at Berenberg, in a note. The rest of Berenberg’s forecast along with the ECB’s September predictions are laid out in this table below. Read more