Swiss National Bank pauses

The Swiss National Bank left the three-month Libor target unchanged at 2.75 percent yesterday, the first time since December 2005 that a policy meeting was not followed by a rate increase.

Speaking of unchanged rates, the Bank of Japan's extended pause in its tightening cycle looks set to continue after today's Tankan report showed a fall in manufacturer sentiment to 19 points in December from 23 in September.

Meanwhile, the Federal Reserve, which is already on an easing cycle, might also want to consider a pause after yesterday's economic data.

US retail sales were up sharply by 1.2 percent in November, the strongest sales pace since May, after rising 0.2 percent in October.

Producer prices were also up sharply by 3.2 percent in November, the largest gain since August 1973. Energy prices were the main driver, but even the core producer price index, which excludes food and energy, rose 0.4 percent.

And the US labour market remains resilient, with initial jobless claims falling 7,000 to 333,000 last week and the four-week moving average falling 2,000 to 338,750.

The Bank of England may also have to tread carefully with rate cuts after reporting that future inflation expectations rose to a record 3 percent in November, up from 2.7 percent in August.