The second ECB meeting of 2017 takes place today. The ECB acknowledged that 'there are no signs yet of a convincing upward trend in underlying inflation' at the last meeting in January. Even as headline inflation reached 2.0% in February, we do not expect the ECB to deviate from this stance. Mario Draghi has outlined four objectives for monetary policy, including that inflation convergence should (1) affect the medium term, (2) be durable, (3) be self-sustained (i.e. prevail when monetary easing ceases) and (4) be region wide. While we definitely see improvements across the region, we do not believe the inflation figures satisfy the four objectives, particularly not with core inflation staying below 1.0%. We therefore do not expect any policy changes today (see preview for details).
EU leaders will gather today and tomorrow for the European Council meeting to discuss the economic situation in Europe.
Weekly US jobless claims are due to be released at 14:30 CET. Claims have been trending lower since early 2016 and last week, data showed initial claims falling by 19,000 to 223,000 in the week ending 25 February, the lowest reading since 1973. The low claims figures are consistent with job growth above 250,000, although admittedly the link is fairly weak.
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