European Central Bank (ECB) chief Mario Draghi appears set to unveil a new round of monetary stimulus today as the ECB struggles to boost inflationary pressures in the eurozone and to fire up the region’s economy.
As part of the plan, the ECB is widely expected to announce a further cut in interest rates along with a move to extend its 1.1tn-euro ($1.2tn) bond-buying scheme or quantitative easing programme amid an uncertain economic outlook.    
Two weeks ago Draghi declared that the ECB would “do what we must” to ensure that the 19-member eurozone remained on an economic growth path and to drive consumer prices back up towards the bank’s annual inflation target of just below 2%.
But data released yesterday showed annual eurozone inflation held steady at a lower than expected 0.1% in November.
The plunge in oil prices, the eurozone’s lacklustre economic performance and the slowdown in key emerging economies such as China have helped to keep the lid on inflationary pressures.
Now, economists are concerned that the refugee crisis combined with a looming terrorist threat across Europe in the wake of last month’s deadly attacks in Paris could dampen consumer confidence in the region.  
The Frankfurt-based ECB currently expects annual inflation in the eurozone to come in at 1.1% this year before rising to 1.7% in 2017.
But ECB watchers believe Draghi will also announce today that the bank has lowered its inflation forecasts when he releases its latest projections.
In the meantime, the prospect of the ECB once again pumping more money into the currency bloc has helped to drive the region’s share markets higher while triggering a slump in the euro, which has lost about 12% of its value since the start of the year.
The euro’s fall against the dollar has been accentuated by expectations that the US Federal Reserve will announce this month that it is moving in the opposite direction to the ECB and that it is hiking interest rates as it winds back its monetary stimulus.
The decline in the euro is good news for the ECB as a weaker currency helps to fuel inflationary pressures and bolster exports.
Analysts believe that Draghi will say today that the ECB has decided to drive its deposit rate deeper into negative territory with a cut of 10 basis points.
The ECB last lowered the deposit rate, which is the rate it charges banks for parking funds at the ECB, to minus 0.2% in September last year.
By trimming the deposit rate again the ECB hopes to force financial houses to lend more money and consequently to inject more liquidity into the eurozone’s hard-pressed financial system.