Despite the political upheaval taking place in the Middle East, and to a degree in Asia, markets are likely to take their lead this week and next week from the inflation backdrop and the reactions of the world’s central bankers.

No fewer than nine G10 central banks are set to decide on their interest rate policy before the end of 2024, and markets haven’t entirely made up their minds what to expect.

Forecasts range from a 0.5% cut by the Peoples’ Bank of China to a 0.2% rise by the Bank of Japan.

As Shares went to pixel, investors were awaiting US consumer prices for November which were expected to show a slight acceleration in the headline rate of growth to 2.7% from October’s 2.6% but no change in the underlying rate from 3.3% in October.

Yet the Federal Reserve, which meets on 18 December, is still seen cutting rates.

Nonetheless, whereas markets had confidently forecast Fed rates falling to below 3% by the end of next year, those cuts are now ‘in jeopardy’ State Street’s global chief investment officer Lori Heinel told Bloomberg.

‘That’s what’s really tricky for investors right now,’ added Heinel. ‘It’s hard to know where the dust settles.’

The Bank of England is no longer expected to cut rates next week, due to the inflationary impact of the Budget which is seen adding as much as 0.6% to prices next year according to the OBR (Office for Budget Responsibility).

Before the Fed or The Bank of England, however, comes the European Central Bank, which is seen cutting rates by a minimum of 0.25% this week with further substantial cuts to come in 2025 due to a stagnant Eurozone economy.

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