LONDON— As traders brace for the simultaneous impact of monetary policy decisions from both the Federal Reserve and the Bank of England, economists speaking to CNBC have indicated that a significant rate cut by the Fed is unlikely to influence the Bank of England’s decision to maintain its current rates this week.
The market currently suggests there is more than a 60% chance that the Fed will implement a 50 basis point cut on Wednesday, rather than a 25 basis point reduction, changing its current rate range from 5.25% to 5.50%. Regardless of the outcome, this will mark the Fed’s first rate cut in this economic cycle.
On the other side, the money markets have adjusted their expectations for a potential cut by the Bank of England during its September meeting. The probability fell from 35% late Tuesday to 26% by Wednesday morning, though this figure remains slightly above last week’s levels.
This adjustment comes in light of U.K. inflation holding steady at 2.2% for August, aligning with expectations and suggesting that the Bank may need to exercise a bit more caution in its policy decisions.
Source (CNBC)
