The pan-European Stoxx 600 index was down 1.24% at 0850 GMT. US markets fell 2.5% after the Fed lifted rates by 0.75% as expected, but hinted that it could impose smaller rises over a longer period. The BoE, which has been playing catchup on dealing with rampant inflation having dismissed it as transitory, is tipped to lift its base rate by 50 basis points at midday today.
UK inflation is at a 40-year high of 10.1% with BoE forecasts guiding for a peak of 11% when October’s data is released.
“An estimated two million borrowers on variable rate mortgages look set to face increased payments after today’s decision while around another two million are on fixed-term mortgages which need re-mortgaging, some at higher rates by the end of 2024,” said Interactive Investor head of investment Victoria Scholar.
Oanda analyst Craig Erlam added: "It hasn't handled things perfectly this year…that's clear. It's taken a far more cautious approach than others leaving it in the situation now that it must raise rates aggressively and publish economic forecasts with little insight into government spending and tax plans. The outlook is uncertain enough without that."
In equity news amid another earnings dump, Shares in ING rose as the Dutch bank launched a €1.5bn share buyback and reported pre-tax profit below expectations.
Danish IT consultancy Netcompany surged 17% on upbeat quarterly earnings, while Norwegian renewable power producer Scatec was up 10% after doubling third-quarter net profits.
Reporting by Frank Prenesti for Sharecast.com