A look at the day ahead in European and global markets from Anshuman DagaWith just a week to go before the European Central Bank (ECB) meets, inflation data takes centre stage for investors.

But will that really change market consensus that big rate hikes are coming? Unlikely.

A spate of inflation data from Germany and Spain might set the tone for the region today, ahead of euro zone numbers due on Wednesday.

Though Fed Chair Jerome Powell clearly cautioned against expecting a swift undoing of its rate tightening sending markets in a tailspin, Rabobank points out that one of the biggest sea-changes at Jackson Hole was actually in the stance from Europe.

Euro zone money markets are now pricing in a two-thirds chance of a 75 basis-point rate hike that sent Germany’s two-year bond yield to two-month highs on Monday before settling lower.

Expectations of an outsized rate hike comforted the euro, while the dollar languished on Tuesday after retreating from a two-decade high against major peers. Stocks recovered in Asia from early declines.In a sign of the difficult choices facing central banks, ECB’s chief economist Philip Lane struck a somewhat dovish tone, saying the ECB should raise interest rates at a “steady pace” until the end of its hiking cycle.

He said this was partly to retain room to correct the policy path if circumstances change.The comments come just after other ECB board member Isabel Schnabel said on Saturday that central banks must tighten policy even into a recession to combat inflation.

And as the energy crisis puts pressure on governments and regulators, the European Union’s energy ministers are set to hold emergency talks on Sept. 9 to seek a response to rocketing gas and electricity prices.

Meanwhile, Dutch railway workers will strike across the country on Tuesday, bringing trains to a halt due to an escalating wage dispute.

Graphic: European Countries by Energy Storage- https://graphics.reuters.com/GLOBAL-ENERGY/EUROPE-STORAGE/klvykwxzgvg/chart.png

Key developments that could influence markets on Tuesday:

Economic data: German and Spanish CPIs, Austria PPI, Swedish consumer confidence

Speakers: Norwegian Finance Minister Trygve Slagsvold Vedum gives a speech on the state of the economy, Governor of Riksbank Stefan Ingves participates in a panel discussion on inflation

(Reporting by Anshuman Daga; Editing by Sam Holmes)