Two of the world's biggest central banks are likely to find themselves with a bigger policy gap by the end of the coming fortnight. David Pollard reports.
Different banks, different beats. The ECB likely to stay its hand at its policy meeting this week - but the Fed seen as close to a hike when it meets next. So close in fact, if it doesn't do so after all the recent hints from Fed officials, markets could take it badly. SOUNDBITE (English) IG SENIOR ANALYST, CHRIS BEAUCHAMP, SAYING: "They've almost painted themselves into a corner, almost inadvertently over the past week, and I think the message sent by a failure to move in March would be that maybe things aren't quite as rosy. Again, this is a market that seemingly refuses to go down, even with a pull-back from all-time highs this week. But I think we should be on watch for a sudden turn in sentiment." Solid growth and unemployment claims at a four-decade low in the US. ECB chief Mario Draghi has called that a 'high-class problem' - as he wrestles with issues of a different kind. Notably, how to contend with German pressure for an end to ultra-loose monetary policy. As inflation in Europe - and at 2.2 per cent in Germany - spikes on energy prices. Tapering QE may still be some way off. SOUNDBITE (English) IG SENIOR ANALYST, CHRIS BEAUCHAMP, SAYING: "The ECB will likely stick to its mantra about the fact that its preferred measure of inflation, the HICP number, is still well below target, and despite the spike higher, the inflation, and across major parts of the euro zone, we still have weakness." The week's key data may well confirm an even stronger US outlook. Non-farm payrolls on Friday - with the UK budget statement due before that - as are Chinese trade figures. An expected 10 per cent surge in exports, 20 per cent boost in imports - likely to make it even easier still for the Fed to act.