The EU agreed to put new restrictions of Russia in the wake of the MH 17 disaster and further conflict between Russian-backed forces and Ukraine.
The new measures include reduced access to European capital markets for Russian state banks, restrictions on the supply of oil industry technology to Russia and a ban on EU companies exporting dual-use technologies to Russia.
Bank of America Merrill Lynch said that while the new sanctions would not have an immediate economic impact on the EU countries or European stocks, continued escalation of the conflict could begin to dent private sector confidence.
Another potential danger is that banking and energy supply channels could be squeezed if tensions with Russia grow, BAML said.
Against this backdrop, together with inflation of 0.4% which undershot expectations of 0.5%, BAML said the ECB is likely to keep further stimulus measures on the table. Although it will not go so far as taking fresh action this soon, having only announced its initial raft of measures in June.
BAML added that it expects Mario Draghi to highlight the ramped up geopolitical risk level but he will argue that the Eurozone is on the path to normalising.
