All eyes today will be on the Bank of England and the European Central Bank as they announce their rates decision. The first announcement will happen at midday, by the Monetary Policy Committee and secondly from the ECB at 12.45BST. Despite the BoE’s recent allusion in July’s minutes to the possibility of an interest rate hike, it is likely that rates are kept on hold, at 5 per cent. In Europe, also, very few economists believe there will be a change in rate, which is currently at 4.25 per cent.

Even if financial market jitters intensify and weak economic data both in the UK and in the Eurozone continue to take over the headlines, inflationary pressures and the ongoing concern in regards to wage inflation are still key issues for both Banks. Maintaining rates at the current level at this stage of play would be seen as the maintenance of the inflation guard without worsening the public mood; therefore policymakers are expected to leavethe “wait and see” mode turned on.

Yesterday German manufacturing orders fell by 2.9 per cent on the month in June, suggesting that the outlook for industry output is deteriorating. While the ECB certainly expected a subdued second quarter, we now have the impression that the German orders and other recent releases must have been weaker than the expectations of even the most realistic members of the board.

For more information, please download today's full HSBC Economic Update.