Those looking forward to an early reduction in interest rates to clear away the post-Christmas blues may be in for a disappointment. Many in the markets, and indeed in the banks and building societies, were convinced that just such a move was on the cards.

However, it now appears that not only will the question of a revaluation of the currency have to be sorted out and March looks like being the earliest this could happen but there is also disagreement in the ranks of the central bankers on Dame Street.

Assistant director general, Michael Casey, made his personal views known late last year. He believes the Bank should do nothing to lead the markets but should let them decide for themselves when it becomes a oneway bet.

Others are thought not to be so sanguine and believe the prudent course is to allow rates to fall gradually over the first half of the year and thus avoid any large falls.

However, one thing seems certain and that is that no one really knows what will happen. "These are unchartered waters, we have never been here before," is perhaps the most common reply from any central banker when asked about the likely course of rates in 1998.

However, given the still outside possibility that the markets may perceive a weakness in the new currency's credibility, it could be that Dame Street is hedging its bets and cuts will be later rather than sooner.

Another factor for the Central Bank to consider is that falling interest rates will further stimulate the economy. And with the Budget Tax reductions also coming into effect in April, the risk is that consumer spending will get another major boost this year, leading to inflationary pressure in some sectors. The difficulty for the Central Bank, however, is that borrowing costs have to fall at some stage. It is only a question of when.