LONDON, June 20: European stock markets rose Thursday as dealers awaited the Bank of Englands latest decision on interest rates, after Switzerland cut borrowing costs and Norway kept its status quo.
The euro remained under pressure over Frances political uncertainty, with just two weeks to go until a snap election in the country.
Switzerlands franc dipped against the dollar after the Swiss National Bank (SNB) announced its second straight interest-rate cut, having become in March the first Western central bank to slash borrowing costs that had been raised to battle inflation.
The Bank of England (BoE) is widely expected to keep its key rate at a 16-year high later Thursday despite official data Wednesday showing UK headline consumer inflation had finally come down to the banks two percent target.
- Central banks - "Central banks are in focus... SNB cuts rates, but don expect the BoE to follow suit," said Kathleen Brooks, research director at trading firm XTB.
Not wishing to influence politics, the BoE will likely take a wait-and-see stance also owing to the closeness of its meeting to Britains general election on July 4.
Prime Minister Rishi Sunaks Conservatives are badly trailing Keir Starmers opposition Labour in opinion polls.
Should the BoE sit tight, market watchers will be looking for clues on whether the UK central bank could cut at the following meeting at the start of August.
The European Central Bank cut earlier this month, while the US Federal Reserve is expected to introduce only one rate reduction this year.
Central banks worldwide had ramped up borrowing costs in recent years to control inflation, which surged when economies emerged from Covid pandemic lockdowns and accelerated after energy producer Russia invaded agricultural power Ukraine in early February 2022.
Elsewhere on Thursday, Asian stock markets were mixed as investors attempted to gauge the Feds rate outlook.
With Wall Street closed Wednesday, there were few catalysts to drive buying, though sentiment has been buoyed this week by recent data indicating the worlds top economy is slowing gradually, giving the Federal Reserve some freedom to ease monetary policy.
Traders are closely following the utterances of US central bank officials on their outlook for rates, with most warning that while inflation was on a downward trajectory, they wanted to see more evidence before committing to a cut.
Analysts say this means there will be two reductions at most, with many predicting just one this year -- in line with the Feds "dot plot" gauge released last week. —AFP
