The Federal Reserve's December meeting and Bank of England's policy decision will be closely watched. Chancellor Scholz's invitation lost a confidence vote in Germany, triggering a snap election.
The U.S. Fed eral Reserve's final two-day policy meeting kicks off Tuesday, and the central bank's monetary policy decision on Dec. 18 will be a focal point for global markets. Investors will also be looking out for clues to future policy moves from Chair Jerome Powell's press conference after the meeting. The Bank of England then meets on Thursday, with markets so far pricing in only a slim chance of a final rate cut of the year.
In other news, Chancellor Olaf Scholz's invitation lost a confidence vote in the German parliament on Monday, paving the way for a snap election on Feb. 23. Scholz had wanted to lose the vote in order for fresh elections to be triggered. The move came after the collapse of his coalition government last month. Data releases in Europe Tuesday will include U.K. unemployment figures and Germany's Ifo business climate and economic sentiment index. There are no major earnings releases.Wednesday's Fed decision will come with an updated summary of economic projections from FOMC members, including a new 'dot plot' that projects the path of interest rate cuts. However, the more interesting output from the meeting could be commentary about how the central bank views the risks of inflation and a potential rise in unemployment, said Cayla Seder, macro multi-asset strategist at State Street. 'The December SEP is interesting in that the soonest date is a whole year away. A lot can happen in a single year, so where I think we'll get a bit more color and a bit more clarity is actually in the text around the SEP as opposed to the dots themselves,' Seder said. One area of the dot plot that could be impactful is the final point, representing the terminal rate. A move higher could indicate that Fed officials think the so-called neutral interest rate is higher than they previously though
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