European Central Bank president Mario Draghi isn't likely to make any significant changes to the Bank's ultra-loose policy stance Thursday in Frankfurt, but he may have found just enough momentum in the underlying economy to offer a rare nugget of hawkishness in the post meeting press conference.
Unlike the U.S. Federal Reserve, which tackles inflation and employment, the ECB has a singular price stability mandate, allowing it to focus on currency area inflation dynamics as it calibrates monetary policy.
That has many investors wondering whether recent data -- which indicates the fastest rate of consumer price rises in nearly four years -- will influence the ECB into reversing, or at least signalling a reverse, of either its negative rate policy or the pace of its money quantitative easing program.
Eurozone inflation accelerated to 2% in February, the first it met the ECB's 'just below 2%' price stability target since January 2013. Energy price increases had the biggest upside impact rising and estimated 9.2% from last year.
So-called core inflation, which strips out volatile price components such as food, energy, alcohol and tobacco prices, was measured at 0.9%, unchanged from January and little changed over the past year. That reading, and the consistent level of prices in the region's key services sector, will likely be highlighted by Draghi as he addresses the media at 13:30 GMT and will be used to justify the Bank's ongoing low rate strategy.
At the Bank's last meeting in January, Draghi said cautioned that underlying consumer price pressures remained weak and assured markets that a "very substantial degree" of loose monetary policy was needed to stoke Eurozone inflation to the point where it could reach the ECB's target and remain there for the longer term.
"Headline inflation has increased lately largely owing to base effects in energy prices. But underlying inflation pressures remain subdued," Draghi said on Jan. 19. "The Governing Council will continue to look through changes in (harmonised Eurozone) inflation if judged to be transient and to have no implication for the medium-term outlook of price stability."
However, there's little doubt that the underlying Economy is, at long last, showing signs of a turnaround: last month's IHS/Markit PMI for the manufacturing sector confirmed that factory activity held its six-year high pace last month, and points to a quarterly GDP growth rate of around 0.6%.
That may not be, on face, an impressive enough pace to alter the ECB's thinking, but when set against consistent concerns for Bank's policies from Germany, accusations of currency manipulation from the United States and all-but-assured policy divergence from the Fed, Draghi could be minded to change some of the language in his forward guidance to placate impatient hawks.
In fact, one of those very hawks, Germany's venerable Finance Minister Wolfgang Schaeuble, called for a "timely start" to the ECB's exit plans at a banking even in Berlin Thursday, a rare interjection on the day of an ECB rate decision.
Evidence of that ECB/Fed differential was offered Thursday in the form of the widest rate differential between two-year U.S. Treasury notes and two-year German bonds -- 2.2% -- in at least two months and not far from the 2.39% record peak in mid-December.
The Fed will gather next week in Washington, with investors pricing in an 88.6% chance of a rate hike when the meeting's decision are made public on March 15.
That said, Draghi's not likely to offer critics -- or indeed supporters -- too much in the way of new ammunition ahead of critical elections in the Netherlands next week and France next month, both of which have been dominated by populist, anti-European rhetoric from far-right candidates Geert Wilders and Marine Le Pen.