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Matthias Knab, Opalesque:

David Zahn, CFA, FRM - Head of European Fixed Income, Senior Vice President, Franklin Templeton Fixed Income Group writes on Harvest Exchange:

We know the European Central Bank (ECB) likes to flag changes to its monetary policy approach well before they're implemented. That's why we expect an imminent announcement from ECB President Mario Draghi that the bank will start winding down its quantitative easing (QE) program next year. That announcement could come as soon as September 7 when the ECB's governing council next meets, although we don't expect the actual tapering of the program to begin until 2018.

Not Priced In

While any announcement is likely to cause a dramatic response from the financial markets-all the more so because few markets seem to be pricing in the possibility of a change in tack at the moment-we don't foresee a quick end to the ECB's asset-buying program.

In our view, the prospect of interest-rate hikes across the eurozone is even further off. Draghi's term as ECB president is due to run until the end of 2019, and we'd be surprised to see a rate hike before then.

Strengthening Euro Pressures Inflation

The ECB probably finds itself in bit of a conundrum, which we think adds to the likelihood of a steady approach to unwinding QE. The euro has strengthened since the beginning of the ye......................

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