By Amaka Abayomi

Interest rate announcements from the European Central Bank, the Bank of England and the Reserve Bank of Australia dominate the economic agenda this week.

Although the ECB’s main refinancing rate is expected to be left at 1.25 per cent on Thursday, investors will look for clarity on the central bank’s next move at the press conference.

At its May meeting, when it lifted the rate by 25 basis points, Jean-Claude Trichet, ECB president, signalled the bank would remain “vigilant” to the risks of inflation.

This usually signals a further rate rise at the meeting after next. Should Mr Trichet indicate at Thursday’s meeting that “strong vigilance” is needed, it will surely mean a further 25bp rise in July.

It will come as little surprise to see the Bank of England leave its main rate at 0.5 per cent on Thursday, given the stuttering recovery in the UK economy.

First-quarter growth failed to pick up from the 0.5 per cent seen in the flash estimate when revised data were published last month.

And recent purchasing managers’ surveys have shown disappointing trends in the manufacturing and services sectors.

Meanwhile, the balance in the monetary policy committee seems to be shifting back to the dovish camp after Paul Fisher last week revealed in an interview that he would consider voting for further quantitative easing if the economy suddenly turned lower.

After the departure from the MPC of Andrew Sentance last month, only two hawks calling for a rate rise remain: Martin Weale and Spencer Dale.

Australia’s central bankers signalled in the minutes from the RBA policy committee’s last meeting that rates would need to move higher “at some point” to contain inflation.

But given the natural disasters, including the Queensland floods, during the first quarter, much remains uncertain about the growth rate.

HSBC analysts think this will prompt the RBA on Tuesday to keep rates on hold at 4.75 per cent.

Following the recent softness of manufacturing purchasing managers’ data recently, industrial production figures from Germany and the UK will be scoured for further evidence of any slowdown in activity.