Stefan Koopman, Market Economist at Rabobank, points out that Reuters ran an article coming from “ECB sources” saying that at next week’s policy meeting there will be a discussion on dropping the ECB statement’s reference to downside risks and changing it to “largely balanced”.

Key Quotes

“So far so good; we expect that the Council may use the June staff projections to justify upgrading its risk assessment regarding its growth outlook. However, we also think that they would be much more cautious to statements that relate to the risks surrounding the inflation outlook. Yesterday’s German inflation data only underlined this view, but also note that the EC has Eurozone inflation forecast to return to 1.3% in 2018. If the ECB looks at the same data and uses a comparable model, why would their forecast be significantly higher?”

“The article went even further by noting that there may also be changes to the easing bias in the statement. This really is a long shot: the Governing Council hasn’t (officially) discussed this yet and it will certainly take lots of time to find consensus on this front. We believe the Council will consider adjusting its forward guidance only in the second half of this year – under the condition of an improvement on the wage front.”