European Central Bank officials have to decide today whether the economic recovery is strong enough to warrant an imminent slowdown in monetary stimulus. They’ll be weighing risks to the outlook such as supply-chain bottlenecks and rising coronavirus infections against data pointing to a robust rebound in the 19-nation currency bloc. If President Christine Lagarde and her colleagues decide to reduce bond purchases in the fourth quarter, they will probably try to convince markets that this isn’t necessarily the beginning of the end of their extraordinary stimulus measures. More fundamental decisions about what to do in 2022 when pandemic buying is scheduled to end are only expected to be taken later this year. Until then, watch out for an intensifying debate among the 25 members of the ECB’s Governing Council.

— Alexander Weber and John Ainger

What’s Happening
Asia Plan | The EU will seek to establish Digital Partnership Agreements with Japan, South Korea and Singapore as part of an Indo-Pacific strategy that it will launch next week, according to a draft seen by Bloomberg. The agreements are aimed at building standards for technologies like artificial intelligence and bolstering the flow of trusted data. The bloc also wants to work on improving supply chains for semiconductors.

Surprise Turnaround  | Less than two years ago, Olaf Scholz rode the glass elevator down to the ground floor of the Social Democrats’ Berlin headquarters with the derisive cheers of his colleagues still ringing in his ears as they celebrated his defeat in the party leadership contest. Things look very different now. Read our story on his transformation.

Climate Trap | European power companies could be caught in a 114 billion-euro debt trap should they delay taking steps to become climate neutral by the middle of the century, according to a new study from the University of Oxford. It adds to a growing body of research that suggests being proactive on the climate now is cheaper than waiting. 

Fossil Fight | Debt concerns aren’t enough to convince Czech Prime Minister Andrej Babis though, who’s vowed to defend the country’s key car-making industry. He said that he would challenge the EU’s proposal to end the manufacture of new combustion engine autos by 2035.

Carbon Removal | One widely touted solution to the climate crisis is removing carbon from the atmosphere. In Iceland’s barren landscape, a new container-like structure has risen alongside plumes of steam near the Hellisheidi geothermal power plant. And its job is to swallow carbon.

In Case You Missed It
Taps On | Gazprom is planning to start flowing natural gas through one of the world’s most controversial pipelines next month, according to people with knowledge of the plan. The Russian gas giant wants to begin shipping the fuel through the first leg of the Nord Stream 2 link to Germany on Oct. 1, though it still depends on a decision by the German regulator.

Electricity Surge | The Nord Stream 2 flows could be a welcome relief to European gas markets, with prices for electricity surging across the continent, in an early sign of what’s to come this winter. British and Spanish rates hit records, and there’s already signs that it’s starting to be felt in citizens’ pockets. Here’s why they’re rising so dramatically.

Carbon Speculating | Record gains in EU pollution prices prompted a German power company to call for the bloc’s financial market regulator to curb the influx of speculative investors into the market. Stromio GmbH last month contacted the European Securities and Markets Authority about the need for limits on the amount of derivatives related to the EU Emissions Trading System that investors can hold, according to a letter we’ve seen. 

Nuclear Tensions | In a conversation with EU Council President Charles Michel, Iran’s President Ebrahim Raisi said a confrontation with the U.N.’s nuclear watchdog would be “unconstructive” and lead to an unhelpful response from the Islamic Republic. Monitors report that some of their surveillance equipment went missing following a mysterious explosion in June.

Chart of the Day

The cost of moving cars across the ocean is surging. Vessels that carry autos and industrial machinery fetched their highest rates since 2008 in August, according to Clarksons Research Services. Stretched global supply chains and a worldwide recovery in car sales during 2021 have contributed to a surge in rates, while the crunch has echoes of the container shipping market — where soaring rates are raising the cost of hauling everything from bicycles to coffee.

Today’s Agenda
All times CET.

• 10:30 a.m. European Parliament hearing by Committee on Foreign Interference on spying on European politicians and institutions
• 10:30 a.m. German Chancellor Angela Merkel and others speak at European People’s Party meeting in Berlin
• 1:45 p.m. ECB rate decision in Frankfurt followed by 2:30 press conference with Lagarde
• Commission President Ursula von der Leyen participates in an exchange of views at the European Parliament with the EP Conference of Presidents on the State of the Union, the Commission Work Program 2022 and EU priorities
• Commission Vice President Maros Sefcovic visits Ireland and Northern Ireland
• EU’s antitrust chief Margrethe Vestager participates as keynote speaker in the International Cybersecurity Forum in Lille, France
• Home Affairs Commissioner Ylva Johansson in London for the G-7 Interior and Security Ministers meeting
• Jobs Commissioner Nicolas Schmit in Athens
• Europe's top diplomat Josep Borrell is in Tunisia