Both the Bank of England and the European Central Bank meet this week and will announce their respective decisions on Thursday. The betting is that the Bank of England will lower their policy making interest rate for the third time. The easing will be in response to the sharp first quarter slowdown combined with indications that growth is sliding further in the second. While a 25 basis point reduction is expected, a larger cut cannot be ruled out. The Bank of England has plenty room to maneuver given the gloomier outlook both domestically and globally.

No change in ECB interest rate policy is expected, given recent comments by monetary policy makers. With inflation climbing, it is unlikely that weakening economic data will sway their thinking. However, ECB President Wim Duisenberg will get an opportunity to restate anti-inflation policy at his regularly scheduled press conference following the meeting.

The earnings season is just getting underway in Japan. And whereas most of the bad news is out elsewhere, it may be just beginning there. It will be interesting to see if investors will put aside past earnings news in light of what new Prime Minister Junichiro Koizumi says to parliament on Monday.

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