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European Central Bank officials will debate whether to prolong their elevated pace of emergency bond-buying this week, a judgment that rests on how fragile they determine the economy’s recovery to be.

Confidence is the strongest in three years, prices at factory gates are jumping by the most since 2008, and inflation is technically above target. Yet multiple policy makers have signaled that’s not enough to change course — continued ultra-loose policy is needed to drive home the rebound from an unprecedented crisis that isn’t yet over.

Underpinning their decision on Thursday will be new economic forecasts, which are likely to emphasize the volatility of incoming data. Officials led by President Christine Lagarde foresaw the jump in inflation, and insist it will prove temporary as energy prices stabilize and the shortages that have hampered companies are overcome.

Instead, some Governing Council members are concerned that the economic weaknesses hinted at in data such as France’s surprise first-quarter contraction could be lurking beneath a veneer of summer buoyancy as lockdowns ease. Rising bond yields and a stronger euro give them ammunition to argue that the ECB must do more to meet its pledge to keep financing conditions favorable.

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A lively debate is likely though, in a possible precursor to the discussion the Federal Reserve will have the following week on whether to keep up its own stimulus or start paring it back.

For both central banks, the extreme circumstances of the pandemic are a hindrance to assessing the outlook for price stability. Outgoing OECD chief Angel Gurria argued last week that this isn’t the time to worry about inflation — but with a caveat: “One should always keep it in the back of our minds.”

What Bloomberg Economics Says:

“As intra-euro-area yield spreads widen, this seems to be no time for the hawks to bicker about more bond buying. We expect policy makers to opt for another three months of ‘significantly higher’ purchases through the Pandemic Emergency Purchase Program.”

–David Powell and Maeva Cousin. For full preview, click here

Elsewhere, Canada’s central bank is set to continue laying the groundwork for a tightening of monetary policy, while Russia may hike interest rates. The World Trade Organization meets Tuesday to discuss expanding the production of Covid vaccine facilities.

Click here for what happened last week and below is our wrap of what is coming up in the global economy.

Europe, Middle East, Africa

It’s not just the ECB gathering in the region this week. The Bank of Russia holds a rate-setting meeting Friday where it will consider another hike to try to tame surging inflation, with officials warning that the economy is already at risk of overheating.

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Polish policy makers meet Wednesday after inflation surged to a decade high last week. That will test the institution’s long held stable rates mantra. Kazakhstan and Uzbekistan central bankers also set rates.

With the U.K.’s full reopening on June 21 increasingly in question, investors will be keeping a close eye on monthly GDP, industrial production and trade figures due Friday.

South Africa’s first-quarter GDP reading is due Tuesday, with economists predicting a quarterly expansion, but an annual contraction. The Turkish Statistical Institute will release unemployment numbers for April on Thursday, and data that same day may show inflation in Egypt accelerated in May.

Finance ministers in at least four east African countries will present their budgets for 2021-22 on Thursday and Friday.

For more, read Bloomberg Economics’ full Week Ahead for EMEA

U.S. and Canada

In the U.S., eyes will be on the latest reading of the consumer price index on Thursday, given the intense debate around inflation. Other data points coming include April job openings and the next report on jobless claims, which dipped below 400,000 in the past week’s release for the first time since the pandemic.

Policy makers at the Fed are in blackout this upcoming week ahead of their next meeting on June 15-16.

Investors will be watching the Bank of Canada, which announces its rate decision Wednesday, for any clues on plans to tighten of monetary policy.

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For more, read Bloomberg Economics’ full Week Ahead for the U.S.

Asia

Japan and South Korea release revised output figures that will confirm their contrasting fortunes.

Japan remains in a virus emergency that puts its economy at risk of a double-dip contraction and makes the staging of the Olympics less than clear cut. Korea’s economy is well on a recovery track, though jobs figures out Wednesday will be closely watched to see if the uptick is filtering beyond the export sector.

Bank of Korea Governor Lee Ju-yeol is likely to give an anniversary speech at the end of the week amid mounting rate-hike bets. Bank of Japan Deputy Governor Masayoshi Amamiya will meanwhile speak on Libor as the central bank continues to encourage faster efforts to transition away from the benchmark.

Economists forecast data on Wednesday will show China’s producer prices climbed 8.4% in May from a year earlier — the fastest pace since 2008 — while consumer prices rose 1.6%. That would be the widest gap between the two since 2017.

For more, read Bloomberg Economics’ full Week Ahead for Asia

Latin America

Chile reports May trade figures, including copper exports, which in April recorded the second-best month in 25 years. Inflation data should show prices creeping up but year-end expectations are anchored near the target. The central bank, which meets Tuesday, is expected keep the key rate at a record-low 0.5%.

Brazil’s retail sales report for April should show some weakening from March while the year-on-year figure may hit a record high due to the base effect.

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Look for consumer prices in Mexico to have edged lower in May from April’s 6% year-on-year reading while Brazil’s benchmark inflation index may have breached 8%. Both country’s central banks meet later this month.

Latin America’s second-biggest economy is well into a recovery, but this week’s likely spectacular industrial output data will owe much to the base-effect comparison to last spring’s shutdown in Mexico.

Finally, Peru’s central bank will all but certainly keep its key rate at a record-low 0.25% for a 14th straight month.

For more, read Bloomberg Economics’ full Week Ahead for Latin America

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