Global markets eye Fed ahead of anticipated rate cut

This week, global markets and investors are focused on Washington as the Federal Reserve is expected to announce what may be the first rate cut of President Donald Trump’s second term.

The decision comes during a busy week of monetary policy meetings that will shape the course of one-fifth of the world’s economy and half of the ten most-traded currencies.

- A week of Central Bank moves -

The round of decisions began with the Bank of Canada, followed by the Fed's highly anticipated announcement on Wednesday, then the Bank of England on Thursday, and closing with the Bank of Japan.

These major central banks are expected either to adjust borrowing costs directly or provide clear signals about their outlooks for the final quarter of the year.

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- Spotlight on the Federal Reserve -

The Fed's policy meeting comes amid competing pressures: repeated calls from the White House to cut rates to stimulate growth, and Chairman Jerome Powell’s caution over inflation risks.

Recent labor market data showing signs of slowdown have led most economists to predict a quarter-point (25 basis point) rate cut.

Analysts at Bloomberg Economics argue the Fed is lowering rates not necessarily because of economic fundamentals, but because markets expect it and the White House is demanding it.

- Global central bank outlook -

Worldwide, Canada and Norway are expected to follow the US in moving toward rate cuts.

The Bank of England is likely to hold steady, especially after divisions emerged in its August meeting. 

Meanwhile, the Bank of Japan is expected to continue tightening policy, though without signaling an imminent rate hike.

In other major economies, including Indonesia, Brazil, and South Africa, central banks are expected to adopt a “wait-and-see” approach, keeping rates unchanged for now.