Trio of G-7 central banks may set tone for 2020

The European Central Bank and Bank of Japan are among Group of Seven institutions leading the charge this week with their first interestrate meetings of 2020, each of which may set the tone for the year ahead.

Newly appointed ECB President Christine Lagarde will inaugurate a once-in-ageneration review of monetary policy strategy where officials will mull for months on whether to change their inflation target. In Tokyo, central bank officials are poised to keep their monetary stance unchanged as they confront growing expectations for eventual tightening. Meanwhile the Bank of Canada is also expected to stay on hold.

Two major themes for central banks in 2020 are limited need for short-term stimulus and abundant need for long-term relevance. Both will be on display in the week ahead, with the ECB, Bank of Japan and Bank of Canada all set to stay on hold, and the ECB catching up with the Fed by launching a review of its price stability mandate.

Here's what happened last week and below is our weekly wrap of what's going on in the world economy this week, including the annual gathering of the World

Economic Forum in Swiss mountain resort of Davos, where the International Monetary Fund will present updated economic forecasts on Monday.

The most important economic number of the week may come on Friday, with the release of Purchasing Managers' Indexes for the U.K. that are increasingly seen as make-or-break for a potential January interest-rate cut from the Bank of England. With market bets on such a move hovering around 70%, a clear bounceback, reflecting the greater certainty brought about by Prime Minister Boris Johnson's decisive election win, may be required if Governor Mark Carney is to avoid cutting rates at his final meeting next week.

In Europe, Lagarde will unveil a rethink of the ECB's monetary policy strategy in Frankfurt on Thursday. Economists predict the exercise will eventually lead the institution to tweak its policy framework by giving equal weight to too-low and toohigh inflation.

Across the border in Switzerland, the annual gathering in Davos will kick off on Monday. A host of central bankers are going, including Bank of Japan Governor Haruhiko Kuroda, Lagarde herself, and Bank for International Settlements chief Agustin Carstens.

Investors are also watching for clues on whether Russian Finance Minister Anton Siluanov will stay on in his post after a cabinet reshuffle. In South Africa, a release on Wednesday will probably show inflation quickened for the first time four months in December, but remained well below the midpoint of the central bank's target band. Meanwhile, Nigeria's central bank is expected to hold rates for the fifth straight meeting on Friday.

The Bank of Canada is expected to keep interest rates unchanged on Wednesday, leaving borrowing costs at the highest level among advanced economies. Governor Stephen Poloz, who is due to step down in June, will hold a press conference following the decision.

In the U.S., the Federal Reserve is in a blackout period before its first meeting of 2020, and it's a light week for economic data, with PMI reports due Friday probably the highlight.

The Bank of Japan meets on Tuesday, with economists predicting it will retain its current stimulus settings, while Malaysia and Indonesia's central banks may be similarly steady when their officials gather on Wednesday and Thursday, respectively.