Source: Sharecast
Full-year numbers from Pan African Resources and Supermarket Income REIT will also be released.
On the macroeconomic calendar, UK consumer price and producer price inflation for August will be in focus, while across the pond, retail sales figures for August will be eyed.
As far as the Fed policy announcement is concerned, Kathleen Brooks, research director at XTB, said this is the most highly anticipated meeting of Fed chair Kevin Warsh’s tenure so far, and the market is fairly certain the Fed will hike rates. Brooks said there is currently an 86% probability priced in by the Fed Fund Futures market.
"Wednesday’s expected decision will set the tone for the rest of the week and the month, in our view," she said. "The last time Warsh spoke after a Fed rate meeting, Treasury yields spiked and he spooked financial markets. Investors and traders are having trouble getting used to Warsh’s stance on forward guidance. He says that he doesn’t like forward guidance, yet at every opportunity he speaks out about inflation. Is it any wonder that the market is rushing to price in a rate hike when the Fed’s preferred measure of inflation, the core PCE, has been well above the 2% target every month this year?
"This is a big test for Warsh. A rate hike from the Fed could put some of the inflation concerns to one side, and help long-end bond yields to recover, as it would show the market that the Fed is serious about inflation. A failure to hike could lead to another bond market sell off, as investors fret that the Fed is not in control of inflation.
"One thing is almost certain, if Warsh and co do hike rates, President Trump could go ballistic. Trump is correct in one way, a rate hike is not a magic wand and it cannot control an international energy price spike, added to this it can be a sickly cure for an economy. However, cutting rates now, as Trump has demanded, would be economically unfeasible and a terrible idea.
"Due to this, this week’s decision is also a test of the Fed’s independence, as well as its inflation-fighting credibility."