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Is Draghi about to massively misfire?

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It's full steam ahead for stock markets in the run-up to the European Central Bank's (ECB) policy meeting on Thursday, with speculation reaching fever pitch that it could deliver a full-scale quantitative easing (QE) program.

With markets trying to price in the ECB's move, the main risk for this week will be the euro weakening and bond yields tightening. And the central bank faces an additional challenge of living up to the months of expectations and the possibility of opposition coming from Germany.

"(QE's) scale and scope may be limited by opposition from the Bundesbank and by the ECB's natural caution," Jennifer McKeown, the senior European economist at Capital Economics, told CNBC via email.

So far, the ECB has implemented rate cuts, provided cheap loans to banks and purchased covered bonds and asset backed securities in the hope of stimulating the euro zone economy. However, with consumer prices now falling in the region, the ECB has implied that it is ready to reveal even greater measures to try to boost inflation back to its target levels and provide a fillip for growth in the region.

An average of 90 percent of economists polled by Reuters think that the ECB will unveil some sort of QE soon: 70 percent think that it will announce it this week and when questioned about how much Draghi will spend, 70 percent believe that 1 trillion euros in purchases should be enough for QE to be effective.

The Governing Council of the ECB meets Thursday with a rate decision due at 12.45 p.m. and a press conference with ECB President Mario Draghi due shortly afterwards.


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