The European Central Bank (ECB) is not expected to change much at its Governing Council meeting this week, despite a clear resurgence of risks for the euro zone.
The central bank will announce a rate decision Thursday with a subsequent press conference from President Mario Draghi. But it's unlikely to alter its communication strategy let alone its policy stance. Despite concerns over Italy and Brexit, as well as a clear tightening of financial conditions in the U.S. which could eventually spill over into Europe.
"The current 'risk-off' mode in financial markets, developments in Italy and a rising risk of a hard Brexit provide plenty of reasons to sound a more cautionary note," said Dirk Schumacher, an ECB watcher with Natixis, in a research note.
"That said, financial conditions have only tightened moderately so far. Hence, we would expect only small tweaks in the language to reflect the rising uncertainty," he added.
Draghi is still yet to confirm that the ECB will definitely end its quantitative easing program at the end of this year. This is a large bond-buying program that was brought in after the 2011 sovereign debt crisis to stimulate inflation and boost lending.