The increasingly hawkish rhetoric from the European Central Bank (ECB) suggests an increase in euro-zone interest rates on Thursday cannot be ruled out, while no change is expected from the Bank of England, which appears to be maintaining a "wait and see" stance on rates.
The March eurozone purchasing managers' (PMI) surveys for manufacturing today and the service sector, due on Wednesday, are expected to point to further modest improvements in both sectors.
The improvement in surveys such as the PMIs and German Ifo provided the ECB with the confidence in March to revise up its forecasts for gross domestic product growth this year and in 2007.
Survey evidence is normally a leading indicator for how official output will turn out but analysts at HSBC believe the relationships between these types of euro-zone data series have changed.
"There are now no indicators that can reliably be used to predict production growth in the eurozone," says Robert Prior-Wandesforde of HSBC, who says the available surveys provide excellent coincident indicators of production growth but do not lead developments.
Another challenge for the ECB is to ensure it does not suffocate a recovery in consumer spending, which declined 0.2 per cent in the final quarter of 2005.
This weakness looks set to continue in February's retail sales figures, due on Wednesday, with the consensus forecast suggesting a decline of 0.1 per cent. This would leave the year-on-year growth rate unchanged at 0.9 per cent.
A panel of economic experts predicted last Thursday that growth in the euro zone will reach 1.6 per cent in 2007, while inflation will average 2 per cent.
The so-called "ECB Shadow Council" - a group of prominent European monetary economists who meet regularly to discuss monetary policy - said that the ECB's policy remained expansionary.
A majority of the group said the ECB should not raise interest rates when its governing council meets next Thursday, due to the absence of immediate inflationary threat.
But three of those who opposed a rate rise felt that an immediate increase would be premature: "It can be expected that a majority for a rate hike recommendation will develop in the near future," the minutes of the group's meeting stated.
- (Additional reporting, Financial Times service)
