The first call went to the Bank of England and it was of no surprise to the markets yet we see the pound has slightly dipped lower. Rising inflation pressures was just what kept the MPC from further cutting rates as they have already cut rates three times since December taking the overall benchmark from 5.75 percent to 5.00 percent.

With annual consumer prices rising to 3 percent in April above the BoE's target 2 percent rate, Bank Governor Mervyn King is on the verge of writing an open letter to the UK treasury explaining himself and defending the Bank of England on why they couldn't keep inflation tamed in nation.

Excessive rising of food and energy prices are the main drivers of inflation worldwide and according to the inflation report released by the Bank of England, inflation won't return to normal levels before 2009 at a time where many believe that it will still quicken throughout the remainder of the year to possibly reach 4 percent as soon as the summer exceeding previous forecasts of a record high of 3.8 percent in April.

The minutes of this meeting will be released later this month to better explain the current situation in the UK. But if we look at the fundamentals released from the economy we see that it has yet to pick up pace with the housing sector still posing further threats. The Halifax house price index released earlier today showed that prices continued to decline 2.4 percent in May which was worse than expected as demand waned on the backs of tightening lending conditions and decreased spending power. In addition, earlier data concerning both the manufacturing and services sector from the purchasing manager's indices signaled for a slowdown in the two sectors in May.

Policy makers around the world, such as Australia, are pushing for slower economic growth as they hope that the waning demand will bring down inflation in the nation. The only problem is that the spike in the commodities worldwide has made it hard for that to happen. What the BoE is aiming for is that for their slowing growth to cool down prices and therefore give them the ability to cut rates to salvage what is left in the economy.

During the minutes of the last BoE meeting, the MPC members were striving to let those who set prices and wages know that the current spike in inflation to reach levels above the BoE target will be temporary. The question is how temporary? It's already expected to accelerate to 4.1 percent in the summer and not ease before 2009 so is this accurate?

The spotlight has now been turned to the ECB where it was their turn now to release their decisions and again they chose to hold them steady and unchanged at 4.00 percent. Markets didn't quite move as they all were waiting for statements by the ECB President Mr. Jean Claude Trichet.

Inflation in the Euro Zone was at a 3.6 percent rate in May on an annual basis still marking the record high as energy and food prices surge. Economists still believe that this is the beginning and that inflation will still pick up pace in the upcoming period. Growth in the period was still showing a slowdown as retail sales surprisingly fell 0.6 percent in April and the PMI showed a slight retreat.

In the press conference explaining their decision to leave rates steady at 4.0%, Mr. Trichet reiterated that the ECB are focused to ensure price stability over the medium-term according to its mandate.

He noted further upside risks to inflation mainly driven by surging food and energy prices, as HICP is to remain above 3.0% longer than previously estimated, as it will fall back within target in 2009.

He assured his hawkish stance by saying the ECB will act in a firm and timely manner and is monitoring closely with heightened alertness that second round effects to inflation do not materialize, assuring that there is not to be broad based materialization to those second rounds, as wages and price powers of firms must be subdued and will be monitored tightly and closely to ensure that imbalances are not to occur.

He assured economic fundamentals are sound from the euro area as foreign and domestic demand will support ongoing growth and the real GDP.

In addition, he responded to questions saying that the Governing Council after discussing thoroughly the options available as their were various intentions, he noted that upside risks to inflation were of high priority and that the ECB might raise rates in a small amount next month it is not a sure decision yet it is a possibility. While they did not pursue this hike this month as some members favored as the priority is the aggregate view of the Governing Council that is applicable and for that a July rate hike might be a probability.

Both banks are now focusing on inflation showing that a possible rate cut won't be seen soon as the surging prices of commodities is just supporting the flying inflation rates and they have to monitor price stability promptly.

In the US, the Labor Department released its initial jobless claims for the week ending May 31 coming in at 357,000 falling 18,000 from the previous revised reading to 375,000 from an originally reported reading of 372,000. This marked the lowest level since mid-April.

The four-week average also fell by 2,750 to 368,500 marking the lowest level since May 10. This reading measures pretty much the employment trends and it is seen that the readings now are below the levels seen in a recession which is a good sign. In addition, continuous claims fell to 3.09 million shedding 16,000.

This all comes before tomorrow's job's report which will really tell us how the labor market in the US is doing. We have seen mixed data from ADP and the employment sub-index and today finishing it off with the initial claims. It's been a hectic week dear reader but it's almost over as the final market mover is due tomorrow before you can finally get some rest.