In a perfect world, Fed Chairman Ben Bernanke would sit back and watch to see how the limping US economy responds to a series of rate cuts that started last September and the nearly $110 billion in tax rebates going out to consumers.
Instead, inflation at home and abroad has forced him to at least talk about raising borrowing costs, and investors widely expect him to back up his words with action before year-end.
But surprise rate hikes from Mexico and India, along with an ECB meeting on Thursday that is likely to bring modest tightening, may start to sap the global liquidity glut that has fuelled inflation, and do at least some of the Fed's dirty work.
"Given the overall very easy stance of global monetary policy ... a massive global tightening of monetary policy is thus unlikely, especially if the Fed keeps interest rates low for a considerable period," Morgan Stanley economist Joachim Fels wrote in a note to clients.
"We were flabbergasted to see how many countries around the globe have inflation running in the double digits," he added. "We found around 50 countries. And we probably missed some more where data are hard to come by."
With heavily populated countries such as India on that list, they represent 42 per cent of the world's people grappling with soaring prices that threaten to crimp economic growth.
Oil prices hit another record high above $142 per barrel on Friday, while flooding in the US Midwest, where much of the nation's corn and soybeans grow, sent grain markets to record highs. That will surely stoke already high food and fuel prices and hit emerging markets particularly hard.
India raised interest rates twice in June and economists think more hikes are imminent after inflation hit its highest level in more than 13 years in mid-June.
Mexico's central bank boosted its key interest rate on June 20 for the first time in eight months. That surprised many economists, who thought Mexico would keep borrowing costs unchanged because of concerns that weakness in the United States, its top trading partner, would hurt the economy.
Given the widespread price pressures, it is little surprise that Fed Vice Chairman Donald Kohn stressed that tackling inflation requires an international response.
"Policy-makers around the world must monitor the situation carefully for signs that the increases in relative prices globally do not generate persistently higher inflation," Kohn said in a speech last week.
In countries where strong demand for commodities outstrips potential supply, "actions to contain inflation by restraining aggregate demand would contribute to global price stability," he said.
China took a step in that direction earlier in June, when it hiked subsidized retail gasoline and diesel prices.
The ECB has all but promised a modest one-quarter per centage point rate hike at its meeting on Thursday, although some officials have cautioned against making any assumptions about further increases in August.
"We were speaking about July, just July," Jose Manuel Gonzalez-Paramo, who sits on the ECB's Executive Board, said on Friday. "Let's not make conjectures about August."
Spanish inflation soared to an 11-1/2 year high of 5.1 per cent in June, above forecasts of a 4.8 per cent rise. On Monday, a flash reading on euro zone inflation is expected to show a 3.9 per cent jump for June, according to a Reuters poll.
The ECB will probably get more distressing news on prices this week with a final June report on the manufacturing industry due on Tuesday and one on the services sector on Thursday. An early look at that data on June 23 showed activity in both areas contracted unexpectedly, while a measure of raw material costs hit its highest mark since October 2000.
June reports on the US manufacturing and services sectors also come this week. Economists are looking for a similar pattern, with manufacturing contracting while prices continue to climb, although the services sector likely grew modestly.
While another spike in raw materials prices would certainly not sit well with the Fed, the US employment report for June should quell any concerns that stubbornly high food and fuel prices were leading to wage increases.
The central bank's greatest inflation fear is that workers demand higher wages to compensate for rising prices, leading to a vicious circle of even more inflation and wage gains.
Thursday's payrolls report, coming a day earlier than usual because of the July 4th Independence Day holiday, is expected to show a sixth consecutive month of job losses. But it is also likely to indicate that wages grew only modestly, and that should keep the Fed comfortably on hold.