Finance
Morning Bid: Japan Holds, Bank of England up Next
Published by Global Banking & Finance Review®
Posted on December 19, 2024
3 min readLast updated: January 27, 2026
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Quick Summary
The Bank of Japan holds rates, impacting yen trading. Focus shifts to the Bank of England's decision, with potential effects on sterling and global markets.
Bank of England's Decision Looms After Japan Holds Rates
A look at the day ahead in European and global markets from Tom Westbrook
The Bank of Japan left interest rates on hold, as expected, clearing the way for traders to sell the yen - which fell to a one-month low against the dollar - and then switch their focus to the Bank of England's decision later in the day.
A cautious outlook from the Federal Reserve has already set stocks tumbling and the dollar soaring. It also forced investors to confront some of the risks - inflationary or otherwise - that could accompany an unpredictable U.S. administration as President-elect Donald Trump prepares to take office.
Sterling may be ruffled next.
Britain's currency has been supported by the relatively hawkish market expectations for BoE policy - its 1% fall for the year so far is the smallest of any G10 currency against the dollar.
After hot UK wages data earlier in the week, markets are expecting rates to stay on hold at 4.75%. Fifty basis points of cuts are priced in to 2025, with the first 25 bp cut fully priced for May. That could shift if policymakers sound particularly hawkish.
The Fed on Wednesday cut interest rates by a quarter of a percentage point, as expected, but signalled a slower pace of easing ahead.
Fed officials raised their median projection of where they see the long-run neutral rate, significantly raised their 2025 inflation outlook, and continued to sketch out a path of further rate cuts next year.
The dollar extended its gains in Asia, pushing South Korea's won to a 15-year low. Stocks fell.
New Zealand data showed the economy sank into recession in the third quarter, bolstering the case for more aggressive rate cuts and sending the kiwi to a two-year low.
Thursday also brings central bank meetings in Norway and Sweden.
Norway's central bank, in contrast with other western central banks, will likely keep interest rates at their highest level since 2008, supported by economic growth, above-target inflation and a weak local currency.
Sweden's central bank will likely cut its key rate by a quarter point, with further policy easing ahead early next year if inflation remains under control, a Reuters poll of economists showed.
Key developments that could influence markets on Thursday:
- Central bank decisions in Britain, Norway and Sweden
(By Tom Westbrook; Editing by Edmund Klamann)
Key Takeaways
- •Bank of Japan holds interest rates steady.
- •Yen falls to a one-month low against the dollar.
- •Bank of England's decision could impact sterling.
- •Fed signals slower pace of rate cuts ahead.
- •Central bank meetings in Norway and Sweden also in focus.
Frequently Asked Questions about Morning Bid: Japan holds, Bank of England up next
1What is the main topic?
The article discusses the Bank of England's upcoming decision and its potential impact on global markets.
2How did the Bank of Japan's decision affect markets?
The Bank of Japan's decision to hold rates led to a fall in the yen and shifted focus to the Bank of England.
3What are the expectations for the Bank of England?
Markets expect the Bank of England to hold rates steady, with potential shifts if policymakers sound hawkish.
