Fed restarts hiking cycle as markets look to BoE

Frank Walbaum

Important ews this week

Thu, 17th, 13:00 CET UK BoE Interest Rate Decision.
Fri, 18th, JP BoJ Interest Rate Decision.

Fed restarts hiking cycle as markets look to BoE

The Federal Reserve raised interest rates by 25 basis points to 3.75–4.0%, marking its first hike since July 2023. The initial market reaction was negative, but stocks are now recovering, while the US Dollar is gaining momentum. Crypto is also rebounding, and Gold and Silver are moving higher after bouncing from their daily 50-MA. Oil is weaker following its recent advance.
Today, attention shifts to the Bank of England, which is widely expected to keep rates unchanged at 3.75%. The decision comes with UK inflation at 3.1% and energy prices remaining elevated, creating a difficult balance between persistent inflation pressure and a weaker economy.

Market talk

The Fed's new projections are an important part of the bigger picture. Policymakers see only one additional hike in 2026, which leaves the market with a relatively clear but still restrictive policy path. The key question now is whether economic data will justify another move or whether the Fed will eventually pause at current levels. This could keep interest-rate expectations highly sensitive to upcoming US data.
The BoE faces a different challenge. Keeping rates at 3.75% would be a relatively cautious response to inflation that has moved back above 3%, while the energy shock could push prices even higher later this year. Three MPC members already voted for a hike at the previous meeting, so today's voting pattern and guidance could provide an important signal about how divided the committee has become.

Tendencies in the markets

Equities positive, USD stronger, crypto sideways, oil correcting, metals positive, JPY weak.

Author

Frank Walbaum

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The Bank of England (BoE) is set to reveal its latest monetary policy decision on Thursday, coinciding with its sixth rate-setting meeting of 2026. Market analysts expect the central bank to keep its benchmark interest rate steady at 3.75%, which should be its sixth hold in a row following December’s 25-bps rate cut.

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