FTSE 100 Live: Fed interest rates, retail sales, GDP
Good morning and welcome back to the City PM liveblog covering the FTSE 100 and other big market moves.
Investors are bracing for a crunch decision at the Federal Reserve this Wednesday, with markets pricing in a 25 basis point cut to bring interest rates down to 3.5-3.75 per cent.
Forecasters will be taking a closer look at the language around the meeting, with the Fed expected to signal “hawkish elements”, according to Wall Street giant Goldman Sachs.
“The Federal Open Market Committee (FOMC) cannot box itself in too much—especially at a time when there are two employment reports out of date—because a January cut could turn out to be appropriate.”
The bank’s economists predicted one rate cut in each of 2026 and 2027 while growth projections for both years will be revised up.
Atakan Bakiskan, US economist at Berenberg, said: “The last time more than three Fed officials dissented from the majority decision was in 1992, and the next meeting could break that 33-year record of consensus building.
“Fed officials hold a strong case against a cut next week. They can argue that the Fed can wait until the 28 January meeting, assess both the November and December labour market and inflation reports, and then decide. The economy and the labour market will likely not look much different with or without a 25 basis point rate cut after seven weeks.”
Economists will also begin to look ahead to President Trump’s announcement on who replaces Jerome Powell as chair of the Fed, with his decision expected to come in the next few months ahead of the expiry of his term in May 2026.
The Bank of England’s monetary policy decision will come on 18 December, with markets expecting the Monetary Policy Committee (MPC) to deliver a Christmas cut.
Later today, Bank officials are set to be grilled by the Treasury Select Committee on the last decision to hold interest rates at 4 per cent in early November.
Those appearing before MPs will be deputy governors Clare Lombardelli and Dave Ramsden, plus external members Swati Dhingra and Catherine Mann.
They will speak at 2.15pm while Chancellor Rachel Reeves will be grilled on her Budget measures tomorrow.
The various events could sway markets, with investors in the FTSE 100 set to be on stand-by this week.