European Central Bank is almost certainly going to boost its easing program on Thursday

The signs could not be clearer: The European Central Bank is almost certainly going to boost its easing program on Thursday, in its continuing battle to fight off concerns about deflation in the eurozone.

But while analysts are in agreement that a move is coming — especially since the message has been coming loud and clear in the ECB’s recent pronouncements — the question of which tools the bank will use is still being discussed.

“In response to the outlook for lower core inflation, we expect the ECB to fulfill the high market expectations by delivering an aggressive package of easing measures tomorrow,” said Pernille Bomholdt Henneberg, senior analyst at Danske Bank, in a note after the inflation release.

A trio of easing moves?

The big question now is how this “aggressive” package will be composed. The ECB is likely to take the deposit rate even deeper into negative territory, going by the market, which has already baked in a cut. The deposit rate currently stands at negative 0.2% after the latest cut, in September 2014.

At that time, Draghi said rates had effectively reached the “lower bound” — meaning they wouldn’t be reduced further — but he has since backtracked on that. A key reason is that expectations for inflation have been stuck at a low level, which messes up the central bank’s main mandate of price stability.

At the October meeting this year, Draghi revealed the Governing Council had discussed a cut to the deposit rate, among other things, due to the downbeat outlook on growth and consumer prices.

Analysts from Danske Bank, Berenberg and RBC Capital Market expect a 20 basis point cut to the deposit rate to negative 0.4% at Thursday’s meeting, with the ECB keeping the door open for further reductions. Barclays analysts see a 10 basis point reduction, implying negative 0.3%. Negative deposit rates are aimed at giving banks an incentive to lend money to households and businesses rather than just depositing the cash at the ECB.

Analysts generally believe the central bank will extend the duration of its 60-billion-euro-a-month ($63.55 billion) quantitative-easing program, which is currently slated to end in September 2016.

Some economists also expect the ECB to raise the amount of its monthly asset purchases by €15 billion, to €75 billion, as well as to expand the assets eligible to be bought under the QE program, to include corporate bonds and regional bonds.