Lllllet's Get Ready to Rrrrrrrrummmble!

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Charles Diebel, European bond strategist at Nomura, said: "They're sending a message that they will throw the economy into a brick wall and risk renewed credit turmoil if it means controlling inflation."

The ECB steadfastly refused to cut interest rates as the credit crisis flared, and its signal yesterday comes as the world's top central banks turn their collective attention to rising prices.

Federal Reserve chairman Ben Bernanke, who has slashed US interest rates by more than 300 basis points since September, this week left little doubt that battling inflation, rather than further easing in monetary policy, was now at the top of his agenda.

In the UK, Bank of England Governor Mervyn King has warned against the dangers of an inflation spiral and signalled rates are unlikely to be cut from 5pc anytime soon. Inflation is rising in all three economies - with it hitting 3.6pc in the Eurozone in May - and economists reckon that the central banks are mindful of the mistakes made in the 1970s when inflation was rampant.

Jim O'Neill, chief economist at Goldman Sachs, said: "The comparison with the 1970s has aspects of reality. That is at the forefront of central banks' thinking."

However, it's unlikely that the ECB will be able to raise rates this year without an internal battle on its ruling council that pits the faster-growing economy of Germany against Spain and Italy, where growth is anemic, according to Mr Diebel.

"It's going to be bare-knuckle fight."

The latest economic data out of the Eurozone suggests that even the German economy - the region's standout performer this year - is now buckling under the weight of the rising oil price. Industrial production fell 0.8pc in April, figures showed today."

Mr. Bernanke may have an internal fight on his hands as well, should he proceed with his stated attack plan. However, he would ultimately be regarded in a much better light if he chooses to stick to his guns and not let the inflation hydra go on a rampage. Several Fed members have already warned that the non-stop rate slashing campaign should have been halted a while back, so in that sense the Fed fight might not be as animated as the one over at the ECB. There are those however, (politicians mostly) who keep preaching for any accommodation that is possible, to be given to the almighty consumer and to the institutions that have made some bad calls in their investments. For them, rates at zero are not good enough. Thus far, Mr. BB has emulated Mr. Trichet only verbally. Rate action from either side of the Pond may now be a matter of weeks. It could even turn into a contest as to which side hikes first.

Stocks will not like today's data very much at all. But the street is getting used to the idea that such news is no longer a catalyst for a surprise Friday afternoon discount rate cut. That era has come and gone.