Central banks are back on the agenda today

It’s been a while but finally we can reuse the picture above again. Good times. With all the focus on the US election this week, let’s not forget that we also do have key central bank policy decisions to work through. And that will come via the BOE and Fed later today.

Both central banks are expected to cut interest rates by 25 bps and markets are also anticipating one more of that in December. In the case of the BOE, it is fully priced in but for the Fed it is about a ~69% probability currently for the final month of the year.

But for today, it is more or less going to be rather straightforward decisions.

The thing to watch for the BOE will firstly be the vote count. A 8-1 decision split looks to be on the cards with only Mann likely to dissent. That said, we might get Dhingra and/or Ramsden voting for a 50 bps move as well.

Then, it will be down to how policymakers interpret the latest economic developments and also the latest UK budget. There shouldn’t be too much to scrutinise but it may perhaps affect odds for December depending on the language.

As for the Fed, a 25 bps rate cut is all but guaranteed. The question now is how will Powell navigate and communicate the risks surrounding Trump’s presidency and their plans to cut rates further down the road. That will be the only interesting part of the FOMC meeting and press conference today.

This article was written by Justin Low at www.forexlive.com.