Although the economy here and overseas is still the major story for investors, even that will be overshadowed this week by Barack Obama’s inauguration as the 44th US President.

Earlier this year inflation was a big worry, now with inflation fading rapidly around the world there is more and more talk of deflation. The AMP’s Dr Shane Oliver looks at the situation and why we need the US Fed and its chairman, Ben Bernanke to succeed making sure deflation doesn’t grab control in 2009.

No wonder the US Federal Reserve cut its key interest rate to its lowest level ever this morning, and promised to do everything to promote "resumption of sustainable growth" in the US economy after saying that the economic outlook confronting the US had "weakened further".

The Reserve Bank will spend the next six weeks considering the impact of its sharp rate cuts since September and the federal government’s $10 billion stimulus package before deciding on whether interest rates should fall again.

OPEC and the US Federal Reserve meet this week. The US car industry bailout will have to be organised this week, otherwise one of or both GM and Chrysler will go bankrupt.

Business confidence down and falling, consumer confidence up and buoyed by rate cuts and lower petrol prices: once again we are seeing an economy where two major groups of participants are taking divergent views on the economy.