Markets are becoming increasingly worried about the outlook for inflation globally whilepolicymakers' concerns over risks to price stability have been clearly reflected in a stream of aggressively hawkish comments by central bank officials.

The dilemma facing the Bank of England in deciding whether to cut interest rates next month will be illustrated clearly next week by some UK economic releases. Inflationary pressures are mounting while growth momentum is fading with little suggestion of a pick-up in consumer spending or manufacturing output in the short term.