The ECB meets again later this month on 26 April
But it's clear that they will continue to communicate or at least continue to hint at exiting QE when the time comes.
While the headline for the inflation report later is expected to be higher at +1.4%y/y, the core reading is expected to remain somewhat stable close to the +1.0% y/y level. The estimate is for a reading of +1.1% y/y.
In comparison to the past few years, the core reading has held somewhat steady between +0.7% y/y to +1.2% y/y. Despite the consistent readings, it's still somewhat below the ECB's target of a "just under 2%" inflation level.
However, it's clear by now that the ECB does believe that they can normalise policy some time next year - if recent comments are to go by. How much that relies on hope that inflation will rise or that they are seeing actual signals, remains to be seen.
But even if the actual core reading comes in below estimate a little today, it's not going to change their mind or be a reason to panic - at least in the near-term.
Moving ahead, expect next month's reading to see a bit of a dip in the inflation figure. No, it's not due to any slowdown in inflation but more seasonal - thanks to the Easter break (h/t: David Powell, Bloomberg Economics).
Historically, on months when Easter falls at the end of March or right at the start of April, inflation figures tend to suffer a dip - mostly due to a decline in airfares, package holidays, restaurants & hotels as they are likely booked before the holiday period begins.
Here's an illustration of that:
As Easter falls on 1 April this year, expect a similar pattern to develop in next month's reading like the ones we saw in 2013 and 2016.
