Both organisations have a history of “full and frank exchanges of views” behind the scenes. This time around, Opec is more likely to provide the drama, particularly with Saudi policy now flowing from the relatively unknown quantity that is deputy crown prince Mohammed bin Salman.
Mario Draghi’s ECB meeting and press conference are likely to be a much more sedate affair. (Just don’t call it “boring”. The last time everyone expected a “boring” meeting, Mr Draghi ended up being showered in confetti by a protester wearing fashionably tight jeans.)
But fittingly enough, any big clues to what the central bank will do next will most likely stem from oil, with the chance of the first rise in the ECB’s staff projections on inflation since before its bond buying began in March 2015.
The price of oil has rocketed, albeit from a very low base, since January’s plunge. All told, it is up by nearly 80 per cent since that January nadir, with Brent crude nudging briefly above $50 a barrel earlier this month. From the ECB’s March 10 meeting to mid-May, the cut-off point for new projections, the rally stands at about 20 per cent.
Pictet Wealth Management’s Frederik Ducrozet points out that a combination of this and the expected effects of the ECB’s bond-buying could in theory push the median 2018 inflation forecast over 2 per cent. That is above target. It is hard to imagine, and Mr Ducrozet thinks the central bank will “avoid sending this kind of signal”, given persistent risks to global growth.
Still, a brighter outlook would be a real change in tone, and present a tricky balancing act for the central bank. If it looks too confident, the euro could well rally, a shift that would drag inflation expectations back down again.
So, no smiling. Curb your enthusiasm, and be sure to stress that any return to normal is predicated on continuing easy policy. Still, it all dampens the case for yet more rate cuts. Finally, some music to German ears. A Viennese waltz, if you will.
katie.martin@ft.com
