Investor: Economic data releases have been very much to the fore in recent weeks as investors and analysts struggle to assess whether there will be a meaningful rally post the Iraq conflict.

An insider's guide to the market: With the European Central Bank (ECB), the Federal Reserve and the Bank of England all due to meet next week, every piece of economic data is being scrutinised carefully in terms of any possible impact on official interest rate decisions.

All three leading central banks are meeting at a time when any judgment regarding interest rate changes is more finely balanced than usual.

The preponderance of information regarding the global economy over the past few months points towards some further easing in global interest rates.

In the US the first quarter 2003 estimate for GDP growth was 1.6 per cent, compared with the figure of 1.4 per cent for the fourth quarter of 2002.

Most economists were expecting the first quarter GDP performance to be closer to 2.4 per cent, so that the actual outcome disappointed many.

Figures released for personal income and spending for March were consistent with this slower pace of growth, with both income and consumption recording a month-on-month rise of 0.4 per cent.

Despite this lacklustre first quarter growth some of the forward-looking confidence indicators for April show signs of a recent pick-up in confidence levels. These suggest that the risk of a double-dip recession occurring in the US remains quite low.

Therefore, although the pace of economic growth in America may be sub-par it is likely to remain firmly in positive territory.

Unfortunately, this is not the situation in continental Europe where the German economy is clearly flirting with recession.

Indeed, the larger European economies are firmly in the doldrums and are struggling to maintain positive economic growth rates. The region's largest economy, Germany, is key to a broad-based European economic recovery.

The German manufacturing sector, which is critical to the economy, remains weak.

A key barometer of the German business sector, the IFO index of German industrial confidence and conditions, proved recently to be a damp squib by falling from the March level of 88.1 to 86.6 in April.

Most analysts had expected a post-war improvement to around 89, but the unexpected decline means the index is now at its lowest level since December 2001, when the German economy was in recession.

These figures just serve to highlight that the slowing pace of European economic growth would justify a further interest-rate reduction by the ECB. Indeed, the OECD recently called on the ECB to ease interest rates.

However, given the ECB's focus on price pressures, a rate cut from the ECB is by no means a foregone conclusion.

The economic environment in the UK is much better than the other large European economies. In recent years the UK economy has tracked the US rather than mainland Europe.

Nevertheless, the UK is faced with some unique problems. In particular, economic growth has been very unbalanced for a protracted period.

Consumer spending has been the engine of the UK's relatively strong economic performance. A key factor has been the booming UK housing market that has acted to fuel a consumer credit boom.

In contrast the manufacturing sector has been contracting due to the high sterling exchange rate and relatively high interest rates.

More recent UK economic data releases have pointed to a slowdown in retail sales and to a contraction in the pace of growth in personal credit.

This, combined with weakness in the manufacturing sector, may provide enough justification for a further modest cut in UK interest rates by the Bank of England.

Sterling official interest rates are significantly higher than either euro or dollar rates, with the Bank of England repo rate at 3.75 per cent.

A cut in this rate to 3.5 per cent is likely at the Bank of England's upcoming monetary policy committee meeting, although it is by no means a racing certainty.

Dollar interest rates are much lower with the Fed Funds rate at 1.25 per cent - so the room for further cuts is strictly limited.

Unless upcoming data releases point to a sudden deterioration in economic prospects, a further cut in US rates must be unlikely.

Ironically, the central bank with the most justification for lowering rates is the ECB, but on past performance it is the one that is least likely to cut interest rates.

Although the euro repo rate is low at 2.5 per cent it does provide enough room for an easing move from the ECB.

If the bank takes the view that European inflation will reach its 2 per cent target in coming months then it will probably respond to economic weakness by cutting interest rates.

On balance, the odds favour small interest rate cuts across the board next week as the world's key central banks take out insurance in their efforts to curb global deflationary pressures.