A buoyant manufacturing sector and brightening business sentiment has economists expecting the European Central Bank (ECB) to sound cautiously upbeat on recovery today but they see it giving no fresh interest rate clues.
Financial market participants will scrutinise the ECB's editorial statement in its monthly bulletin - due out this morning - to see whether policymakers view surging oil prices as primarily a drag on growth or more of an inflationary threat.
Any shift in rhetoric from its relatively balanced assessment with a modest tilt toward rate tightening could alter analysts' outlook that ECB official rates, now at 2 per cent, are on hold at least through early next year.
"How they highlight the business risks to profits and to consumption, that would be important," said Mr Thomas Hueck, economist at HVB in Munich.
"If they stress that oil prices are primarily a problem for the real economy, that would confirm our view that interest rates will be on hold until the second half of 2005," he said.
The ECB kept rates on hold at 2 per cent for the 14th straight month at a teleconference meeting last week, but, as usual in August, held no news conference to explain its decision.
The bulletin will therefore receive far more attention than usual in financial markets since it will lay out for the first time the reasons for standing pat even as the Federal Reserve and Bank of England are busy raising rates, drawing to a close years of cheap money.
