Draghi sits on Brexit fence as he awaits data
After five weeks of silence, European Central Bank President Mario Draghi is leaving it largely to a raft of economic data to fine-tune policy expectations ahead of the Governing Council's next meeting on September 8.
Reports covering inflation to business confidence and unemployment in the coming days may signal whether more stimulus is needed to sustain the recovery and revive price growth amid potential fallout from Britain's vote to leave the EU.
Momentum in the 19-nation euro area has so far shown few signs of losing pace, and some economists pushed back projections for further easing.
But executives in Germany, the region's largest economy, are beginning to wake up to the Brexit shock, suggesting that more severe consequences may still be ahead.
"I don't think there is anything in the data calendar that is so decisive that it will either change the market or the ECB or both," said Peter Schaffrik, head of European rates strategy at Royal Bank of Canada. "Inflation is going to go up slightly but it's not going to go up fast enough to make them think 'we don't need to do anything."'
Mr Draghi didn't attend this year's gathering of central bankers and economists at Jackson Hole, Wyoming, last weekend, where Federal Reserve Chair Janet Yellen said the case to raise US rates is getting stronger.
Two years ago, he used the same event to flag a major policy shift that ultimately saw quantitative easing. Now, he's deferring judgment of the euro area's economic prospects before fresh staff projections are published.
Executive Board member Benoit Coeure did attend Jackson Hole, and warned that policy makers "may need to dive deeper into our operational framework" if governments don't act to boost growth potential in euro-area economies. Even so, he has previously warned of the risks from the side effects of ever increasing stimulus. (Bloomberg)