As expected, there was no change in benchmark interest rates either in the UK or the US last week but markets found plenty to like in the commentaries from both central banks.

Bank of England governor Andrew Bailey sounded more optimistic on rate cuts than many had predicted given inflation is still over 3% against the bank’s official 2% target.

Bailey told the BBC: ‘We don't have to actually get inflation all the way back to target… to cut rates for instance, what we have to do is be convinced that it is going there. We should act ahead of time in that sense because we have to be forward looking.’

He also said it was ‘reasonable’ for financial markets to price in two or three rate cuts this year given the ‘very encouraging’ progress on bringing inflation down so far.

In a similar vein, Federal Reserve chair Jerome Powell said strong recent inflation data didn’t change ‘the overall story, which is that of inflation moving down gradually on a sometimes bumpy road to 2%’.

Powell also confirmed market expectations of three interest rate cuts this year, although he stressed the timing depended on officials becoming more confident inflation was coming down adding ‘it’s appropriate for us to be careful’.

Next week sees the release of both manufacturing and services indices in the UK, the US and the Eurozone, all of which will be widely watched.

Focus will also be on the US jobs market where there are several data points for the Federal Reserve to parse while it considers the next step in its interest-rate policy in early May. 

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