The European Central Bank’s monetary policy meeting today is quite likely to pass off as a non-event as some of the major Eurozone member nations gear up for elections that could potentially unsettle the current status quo.

The European Central Bank is unlikely to add further to the turmoil especially with no major reasons to justify any policy changes. On the contrary, the ECB governing council is expected to deliberate on the recent string of inflation numbers which have been steadily rising.

Despite headline inflation rising to 2% in February (flash estimates), core inflation figures have remained stubbornly anchored to 0.9% and hasn’t budged much. The ECB is therefore not expected to make any changes but could give moderate inflation projections in the near future.

But given the uptick in headline consumer prices, the markets are likely to be more vulnerable to any hawkish rhetoric from the ECB.

Euro area flash inflation estimates (February 2017): 2.0%

On the same note, Draghi is also likely to dismiss any discussions on exiting from the current QE purchases and could clearly mention that no such talks of further tapering were discussed at today’s meeting. Although a continued uptick in inflation could potentially increase the odds of further tapering which could happen later this year or towards early next year.

ECB could be seen upgrading inflation forecasts

Oil prices are likely to continue playing an important role in supporting the near-term inflation forecasts. Energy prices have been higher, mostly on higher oil prices which rose more than the ECB’s forecasts from December.

Therefore the central bank could be seen raising the headline inflation forecasts closer to the bank’s 2% inflation target range. Beyond the short term forecasts, inflation outlook is unlikely to change much, and long-term inflation projections from the central bank could remain more or less the same.

This is attributed to the fact that the recent surge in inflation from higher oil prices could be offset by other factors which could see inflation moderating as a result over the longer term horizon.