The ECB, expected to hold fire on monetary policy at its meeting Thursday, will likely focus instead on welcoming Greece back into the fold of fully-fledged eurozone borrowers after a bailout deal, analysts said.

After months of fighting the threat of deflation in the single currency area, the European Central Bank could even upgrade its inflation forecasts for the first time in a long time, ECB watchers said.

“Thursday’s ECB meeting is unlikely to bring any new policy announcement, as the central bank is squarely focused on implementing the measures announced in March,” said UniCredit economist Marco Valli.

The ECB announced a new package of measures — a further cut in interest rates, an expansion of the asset purchase programme known as quantitative easing (QE) and new ultra-cheap loans for banks -– a little more than two months ago.

As some of those are still in the process of being implemented, analysts are convinced no further moves are on the cards just yet and certainly not at the meeting Thursday, being held in Vienna instead of the ECB’s normal venue in Frankfurt.

“We see two interesting themes: the new set of ECB macroeconomic forecasts, with the inflation trajectory looking a bit firmer; and the discussion about a potential reinstatement of the waiver on Greek bonds posted as collateral at the ECB refinancing operations,” Valli said.

While eurozone inflation remained in negative territory in May, with consumer prices falling by 0.1 percent, core inflation — which strips out the most volatile components such as energy, food, alcoholic beverages and tobacco — came in at 0.8 percent in May, up from 0.7 a month earlier.

– Upgraded forecasts –

Berenberg Bank economist Holger Schmieding said that following a rebound in oil prices since the ECB’s last forecasts in February and firmer growth in early 2016, the central bank “will likely raise its inflation projections”.

He predicted that the central bank would upgrade its forecast for the current year from 0.1 percent to 0.3 percent.

For the 2017 forecast, Schmieding predicted a revision from 1.3 percent to 1.5 or possibly 1.6 percent, and for 2018 from 1.6 percent to 1.7 percent.

Although higher oil prices could cap the rise in real disposable income, “the ECB will likely celebrate the less subdued inflation outlook as good news,” Schmieding said.

A firmer labour market and a modest fiscal stimulus would help offset the impact of higher oil prices on domestic demand, he added.

Natixis economist Johannes Gareis agreed.

“The recent recovery in the oil price should be welcome news for the ECB,” he said, pointing out that since the ECB’s April meeting, Brent oil has risen by some eight percent and was expected to continue to increase.

ING DiBa economist Carsten Brzeski said that “the biggest news should come from the ECB staff’s latest projections and particularly the inflation forecasts”.

It would be the first increase of the ECB’s inflation projections since the start of QE,” Brzeski noted.

– Greek waiver –

Greece is also likely to be back on the agenda following last week’s bailout deal, analysts said.

“The successful conclusion of the Greek bailout review suggests that the ECB will introduce a waiver and once more accept Greek government bonds as collateral for tender operations,” said Commerzbank’s Schubert.

Greek banks have been unable to take part in the ECB’s regular refinancing operations for a long time now.

Normally, banks receive cash in the form of very low interest loans in return for “collateral” — high-quality assets, preferably sovereign bonds, placed at the central bank as guarantee.

But given the desperate state of Greece’s finances, its sovereign bonds have been classified as “junk” for some years, and are not normally eligible to be used as collateral.

Initially, the ECB granted Greek banks a special waiver to get around this problem, allowing them to use Greek sovereign bonds as collateral, as long as Athens kept to the terms of its international bailout programme.

But then the ECB suspended that waiver until Athens could thrash out an agreement with its international creditors on its bailout programme.

Since then, Greek banks have been kept afloat via the Emergency Liquidity Assistance or ELA programme, which is much more expensive.