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US election and Fed, BoE interest rate calls: Macro week ahead

Published 01/11/2024, 13:45
Updated 01/11/2024, 14:10
© Reuters.  US election and Fed, BoE interest rate calls: Macro week ahead

Proactive Investors - Next week promises to bring a busy period on the macroeconomic front as the knife-edge US election finally arrives and central banks on both sides of the Atlantic make rate calls.

Eyes have been glued to the race between Kamala Harris and Donald Trump ahead of the Tuesday, November 5 election, with polls still showing a deadlock between the two.

Investors are braced for potentially several days of uncertainty until a winner is announced, therefore.

“There are [...] concerns that there’s no immediate clear winner,” Trade Nation analyst David Morrison noted.

“That would be the worst outcome for financial markets and, while it’s unlikely to be the case, investors are mindful of the fact that it took four days to conclude the result in 2020.”

Aside from the election, both the Federal Reserve and Bank of England will also make their latest decisions on interest rates on Thursday.

According to IG analysts, a 25 basis point cut is now widely expected in the US when the Fed meets, following September’s 50 basis point cut.

“Recent economic data [has] led traders to temper expectations for aggressive Fed cuts into year-end,” IG added, highlighting estimates for 50 basis points of cuts by the year-end.

Thursday is also expected to see the Bank of England cut base interest by 25 basis points.

This would follow the decision to hold interest at 5.00% in September after August’s initial 25 basis point cut.

“With activity slowing in recent months, opening up downside risks to the Monetary Policy Committee's growth projections, price dynamics have continued to normalise,” Deutsche Bank (ETR:DBKGn) analysts said.

Read more on Proactive Investors UK

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