This week will witness decisions made by both the central banks of Japan and Australia on interest rates, and considering the strain in financial markets the decisions will have a great impact on the markets and investors confidence regarding the outlook.

Starting off will be with the Reserve Bank of Australia where it is expected to keep the interest rate at 4.50% for the fifth consecutive month. Monetary policy makers led by Mr. Stevens noted that the economical recovery in Australia is persisting and the degree of economic growth closely reaching the levels that has been set by the central bank.

The reason behind the Australian bank raising interest rates is the stability of growth rates pushing the bank to pay more attention to inflation rates and balance the risk over the outlook; but at the meantime the bank returned back to the policy of prudence observing conditions at current rates due to the weakness of global demand and the global financial instability.

The Australian bank has kept the interest rates at 4.50% during the four previous meetings, due to the recent weakness in demand especially from the Chinese economy, weakening demand on mining companies which led the Australian economic recovery. However the bank still expects growth to move in a range of 4% by the end of 2012.

As for the Japanese central bank it will also announce its interest rate decision which is expected to stay at its lowest levels at 0.10%, driving the attention on whether there will be any new programs and stimulus measures or it will be satisfied with the decisions taken during the emergency meeting held by the bank last week.

The BoJ increased its credit program for the first time since March during its emergency meeting last week, as the global economy recovery cooled, which pushed the Japanese government to increase the pressure on BOJ to intervene to curb the Yen's gain.

The BOJ announced that it will increase the amount of funds by 10 trillion yen ($116 billion), to 30 trillion yen. Also the BoJ indicates that an increasing fears on the outlook for growth in Japan, as the U.S. economy continues slowing along with instability in financial markets.

On the other hand, Japanese prime minster noted that the BOJ is prepared to take effective actions, and he expects the BOJ are working for further steps in the upcoming period.

The Japanese economy will also release its final reading for the second quarter
Gross Domestic Product after the preliminary reported estimate showed a sluggish expansion of 0.10% during the first quarter, and annualized GDP expanded by 0.4%.