The European Central Bank is expected to strike a cautious note on the inflation and growth outlook as it holds interest rates steady at its policy meeting today.
Uncertain whether the 30 per cent surge in crude oil prices this year will stoke broad inflationary pressures or weaken consumer spending power, ECB policymakers are ready to bide their time before ending years of cheap money, economists said.
"It will be a balanced assessment, with stronger monetary growth and headline inflation data tempered by the knowledge that wage inflation is subdued," said Mr Julian Callow, head of European economics at Barclays Capital in London.
A revamp of the European Union's fiscal rules, viewed by the ECB as critical for the single currency since budget discipline aids growth, is also expected to be on the agenda.
The European Commission has drafted plans to give more leeway to some countries breaching EU budget deficit limits.
The ECB will announce its rate decision at 12:45 p.m. Irish time, followed by ECB President Mr Jean-Claude Trichet's news conference.
Oil prices resumed their climb overnight, breaching $44 a barrel. But at even higher prices, Mr Trichet has sent a message that he doesn't see costlier energy hitting growth. "There is no reason to question our confidence in gradual recovery," he said in a radio interview last week.