European shares inched up on Thursday helped by stronger banks and a rebound in oil prices but caution dominated as Britons vote in a general election and the European Central Bank holds its policy meeting.
"We expect Thursday's press statement to reiterate that an "exceptional degree of monetary accommodation" is still needed", said Luigi Speranza, an economist at BNP Paribas told Reuters.
The same pattern was repeated with a spike in April, to 1.9%, before a retreat in May.
The bank's president Mario Draghi was careful however not to give financial markets a clear signal as to when its stimulus efforts will start to be withdrawn given ongoing worries over too-low inflation.
Draghi said inflation indicators "have yet to show convincing signs of a pickup".
And it is the main reason why Draghi and his team assert that the massive stimulus by way of asset purchases and negative interest rates is necessary to support the euro area economic recovery, which they say is "fragile". Accendo Markets Analyst, Mike van Dulken commented "After Comey's statement was released in full, major bourses rallied to trade close to session highs". A provision that interest rates could go even lower might be dropped.
Japan GDP for the first quarter led a slew of data, with quarter-on-quarter figures coming in weaker than expected at a gain of 0.3%, compared to 0.6% seen and the annual pace at 1.0% compared with 2.4% expected.
"Hard data will likely convince the governing council to turn less cautious and formally upgrade its growth outlook", said Unicredit economist Marco Valli, predicting an European Central Bank risk assessment Thursday "balanced" between positive and negative.
Nevertheless, such a move would not herald a quick exit from bond-buying.
Oil prices licked wounds after sharp falls on Wednesday to a one-month low, following an unexpected increase in US inventories of crude and gasoline that fanned fears that output cuts by major world oil producers have not done much to drain a global glut.
In a note entitled "Baby steps toward normalization", analysts at Bank of America Merrill Lynch argued that if it were exclusively about the data, the ECB would probably do little more than acknowledge that risks to the economic outlook have turned neutral from negative. The 60 billion euros ($67 billion) per month in bond purchases are to run at least through the end of the year.
"Tomorrow's what is being dubbed as "Triple Threat Thursday",.an event-filled day that could send global markets on a bumpy ride", said ING currency strategist Viraj Patel.
But it is also under pressure to end the scheme, as some governing council members believe it is no longer justified without deflation risks.
Bloomberg, citing unnamed euro zone officials, said the central bank's staff forecasts for inflation for the next three years had been cut to 1.5 percent, from 1.7 percent, 1.6 percent and 1.7 percent, respectively in March.
German Finance Minister Wolfgang Schäuble has also blamed the ECB for trade tensions with the United States, charging that the bank's policy makes German exports too cheap.