The meeting comes against a backdrop of heightened speculation over when it will end its massive stimulus, and signal a rise in interest rates from record lows.
With the euro zone heading for its best economic growth in a decade, the ECB is expected to gradually shift its stance to avoid a more disruptive move later as per the central bank's December meeting minutes showed when published on January 11.
The minutes prompted the euro to surge against the dollar, extending the single currency's rally throughout the opening days of the calendar year. The euro has gained more than 2 percent since the start of 2018 as a broadening recovery bolsters expectations the ECB may be forced to unwind its policy stimulus quicker than forecast.
Also, in December’s meeting, the ECB's main benchmark rates were left unchanged.
Euro strength remains one the main challenges the central bank needs to contend with over the coming months, as a stronger currency tends to soften inflation by making exports more expensive and imports cheaper.
A more hawkish tone from Mario Draghi could be adopted in the March meeting. In December he had a dovish stand but failed to pursue investors and traders when they continued riding the bullish trend of the euro.
The ECB has long-struggled to bring up core inflation to its aim of about 2 percent and the central bank is not projected to meet its target level until 2020 at the earliest.
Late last year, the bank said headline inflation would be at 1.5 percent in 2017 and 1.2 percent in 2018. In October, the ECB announced a reduction in the level of its monthly purchases from 60 billion euros ($71 billion) to 30 billion euros. At that time, the bank also said that its quantitative easing program would stay in place until September 2018. It kept the door open to further extensions in the program, depending on the economic conditions of the euro area.
Mario Draghi is the Man of the Show
Daily Analysis - 25/01/2018