Andrea Iannelli, investment director at Fidelity International
The incoming ECB president Christine Lagarde will have plenty on her plate, bearing the weight of Mario Draghi's legacy with little ammunition left and growing discontent within the governing council around the latest QE programme.
She will have to use all her political skills to navigate still-troubled waters, amid trade wars and a slowing domestic economy.
On the monetary policy front, we therefore expect continuity and the new ECB leadership to remain accommodative. While a new 'sovereign crisis' is not currently on the radar, the latest round of asset purchases is unlikely to prove sufficient, given the weakness of the economy.
We therefore expect the ECB to ramp up its efforts in spite of the internal discontent. Expect upsizing in asset purchases, a bigger balance sheet and yet lower rates, but no major uplift to ensue.
With limited room for further manoeuvres, it will be all the ECB can manage to keep the eurozone economy on a stable, albeit very slow, growth path. Indeed, further asset purchases and even more negative interest rates may prove detrimental in the long run.
Negative rates, in particular, place a heavy burden on banks' profitability, challenging their traditional business models, while forcing savers to take additional risks in their search for a positive income stream.