A look at the day ahead in European and global markets from Ankur Banerjee
The stage is set for the Bank of England on a central bank- heavy day in Europe, with a hike all but certain and the only doubt being whether the BoE will raise interest rates by 25 basis points or by 50 basis points and turn fully hawkish.report on Wednesday, markets priced in a nearly 50% chance that the BoE would opt for a half a percentage point hike. Economists, polled by Reuters last week, unanimously expected the BoE to raise interest rates by 25 bps to 4.75%, their highest since 2008.
With China and Hong Kong closed for a holiday, trading in Asia was a bit subdued, with the MSCI Asia ex-Japan index struggling for direction, while the yen firmed up against the dollar and hovered around the 141 per dollar level. Powell flagged that a majority of policymakers see two more quarter-point rate increases as likely by the end of the year and he still won't characterise the Fed's decision last week to hold interest rates steady as a "pause".While his comments failed to surprise, markets are still unconvinced that the Fed will provide two more hikes. Markets are pricing in a 72% chance of a 25 bps hike next month and then no more, according to CME FedWatch tool.
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