Four unnamed ECB officials told Reuters on Tuesday that the central bank is getting ready to soften its stance on monetary easing next week at a Governing Council meeting.
The meeting on June 8 is the first since the outcome of the French election and will provide an economic update to members. The reduced political uncertainty in the euro zone coupled with stronger inflation and solid economic figures could kick off the discussion on how and when the central bank should "taper".
"In the grand scheme of things, this report merely shows that euro zone inflation pressures returned to 'trend' in May following an unsustainable jump in April," Claus Vistesen, chief euro zone economist at Pantheon Macroeconomics, said in an email.
"Draghi likely will reiterate that the ECB sees no 'sustained upturn in underlying inflation' when the ECB meets next month. Core inflation is a long-lagging indicator in the euro zone, though, and we think it will move higher soon," he added.
Next week's potential talk on "tapering" should therefore be a brief one. The surge in inflation has been mainly driven by energy prices and the ECB is more generally concerned that it is not on a sufficient enough path of sustainability. ECB President Mario Draghi told lawmakers on Monday that despite the positive trend across the bloc, overall extraordinary policy needs to stay.
"We remain firmly convinced that an extraordinary amount of monetary policy support, including through our forward guidance, is still necessary for the present level of underutilized resources to be re-absorbed and for inflation to return to and durably stabilize around levels close to 2 percent within a meaningful medium-term horizon," Draghi said.