Central bankers take centre stage again this week, with monetary policy decisions from the US Federal Reserve on Wednesday and the Bank of Japan on Thursday.

There are also plenty of growth indicators published this week for clues on third quarter gross domestic product. These include purchasing manager data in Europe and the US, retail sales in the UK and eurozone construction output and consumer price inflation.

But it's the monetary policy meetings that catch the eye, even though there have been some fairly dovish signals from both the Fed and the Bank of Japan (BoJ) recently.

Setting the stage for rate hike number three?

Three or four months ago, the markets firmly believed the Fed would be making a total of at least three rate moves this year – some suggesting one at Wednesday's September meeting and a further quarter-point rise in December.

A couple of limp inflation readings later and there are doubts that even a third rate hike will be undertaken by the US central bank after its two quarter-point increases in March and June that lifted the Fed funds rate to a range between 1%-1.25%.

Fed Chair Janet Yellen to deliver the rate verdict of the board of governors on Wednesday - Source: Federal Reserve

Earlier this month Neel Kashkari, president of the Minneapolis Fed district, said the hikes already made may be "doing real harm" to growth prospects.

He said it was possible the rate increases over the past 18 months were "leading to slower job growth, leaving more people on the sidelines, leading to lower wage growth, and leading to lower inflation and inflation expectations".

Indeed, many analysts believe the Fed will now put policy on hold for the rest of the year.

"In recent months, investors have pared back their expectations for future increases in the US federal funds rate," says John Higgins at Capital Economics, citing low inflation and the economic impact of recent hurricanes.

BoJ seeks 'normalising' path

The BoJ has already started the process of unwinding its stimulus measures – albeit the small step of shifting to yield curve control.

Some have called it a "ninja exit" or "stealth tapering" as the BoJ reduces it monthly bond purchases by only the amount it needs to keep long-term bond yields where it wants them.

Most believe that with annual consumer price inflation at just 0.7% the BoJ is still a long way from making a move on interest rates, despite above trend growth.

BoJ governor Haruhiko Kuroda 'will see no benefit changing the policy stance now' - Source: Wikimedia Commons

Rob Carnell, Asia-Pacific head of economic research at ING, says: "Governor Kuroda will see no benefit in changing the BoJ stance now, especially against the background of dollar weakness. Any change would likely fly straight into a stronger yen and start to undo any of the good the policy may be doing."

Markit purchasing manager surveys: US and eurozone

The US Institute of Supply Management's ISM indexes, like European Markit purchasing manager indexes (PMI) register growth in business activity when the index is above 50.

Markit PMI measures in the US, however have not been quite so robust as the ISM measures.

While the US manufacturing Markit PMI rose to 52.8 in August from 52.5 in July, the service sector index eased to 56 from 56.9.

No causes for alarm, however, as the new orders component continued to show a healthy input of upcoming work and employment gauges also looked robust.

Analysts believe that some slowing is likely in Friday's September data, related to disruptions caused by the recent hurricanes, so any reading in the next couple of months is likely to be unreliable until the hurricane impact settles.

Eurozone Markit PMI measures have also been robust over recent months, reflecting ongoing robust economic recovery in the shared-currency bloc.

Some slowing in the pace of growth in the services sectors was evident in August, but new orders data has provided a promising picture of future growth.

“There’s good reason to be optimistic that the current growth spurt has further to run," says Chris Williamson, chief business economist at IHS Markit.

UK retail sales

Wednesday's retail sales data for August are likely to reflect a rather subdued consumer outlook.

Poor summer weather and high inflation relative to low wage growth are likely to have continued to take their toll, as in July when annual sales growth fell to 1.3% from 2.8% in warm and sunny June.

In July, growth was strong in food stores, while household goods showed moderate growth. But growth declined in all other sectors.

Analysts believe that a further slowing to 1.1% annual growth is likely for August.

The best of the rest

Also this week we see Rightmove's house price index on Monday, which has shown a slowing trend in recent months. Also on Monday is the eurozone consumer price index for August.

In Europe on Tuesday, Germany's ZEW economic sentiment report is expected to show analysts in the region's largest economy remained upbeat. Construction output for the currency bloc is also published on Tuesday.

Corporate results

In the US, the main reports are on Tuesday from Adobe Systems, Bed, Bath and Beyond, and FedEx, with General Mills on Wednesday.

Among the highlights in the UK, Wednesday sees retailer Kingfisher with interims results, while on Thursday Capita, the outsourcing group reports and on Friday it's the turn of Smiths Group.