A NUMBER of key central banks have outlined their views on inflationary risks in their respective economies in recent weeks.

THE European Central Bank is expected to leave official interest rates unchanged at its monthly policy meeting on Thursday, but signal that the next increase will be in March.

THE US Federal Reserve last increased official US interest rates by 0.25% to 5.25% in June 2006.

FINANCIAL markets got two surprises last Thursday, one bigger than the other. The bigger surprise was the decision by the Bank of England’s Monetary Policy Committee (MPC) to raise official British interest rates by 0.25% to 5.25%.

THERE have been some fairly fierce moves on currency markets. Most notable has been the marked deterioration in sentiment towards the dollar.

BASED on the data published in last Saturday’s government White Paper on Receipts and Expenditure, the scene is set for a very generous Budget tomorrow.

ONE of the main uncertainties that have unsettled financial markets recently has been the extent of inflationary pressures in the major economies and the likely response of central bankers to these pressures.