ECB to hold meeting tonight

The ECB meets tonight after an eventful summer with turmoil in EM, collapsing inflation expectations and continued uncertainty in Greece. Last week, Praet warned that "developments in the world economy and in commodity markets have increased the downside risk of achieving the sustainable inflation path toward 2%" warning "there should be no ambiguity on the willingness and ability of the Governing Council to act if needed". Constancio made similar remarks on Tuesday. 

Some are talking up the risk of the ECB acting as soon as this week (Praet says there is "sufficient flexibility" to act "in particular in terms of size, composition and length") but there is enough evidence of economic momentum in H2 for the ECB to keep a steady hand. We also get updated staff projections and look for downward revisions to inflation, with 2016 possibly being brought down to 1.2%