Investors are preparing for a downturn on Thursday, as they digest the latest rate hike from the U.S. Federal Reserve. They also look forward to the next monetary policy announcement by the European Central Bank.
It is expected that the ECB will raise interest rates again, as it tries to control inflation in the Eurozone. Market watchers are expecting a 25 basis-point hike. However, a higher hike is not ruled out given the recent inflation data.
The ECB will publish its rate decision at 13:15 p.m. London Time and ECB president Christine Lagarde is expected to make a brief statement soon after.
The global markets also reacted to the U.S. Federal Reserve’s latest rate increase on Wednesday. As widely anticipated, the central bank increased rates by 25 basis point, bringing the range of federal funds rates to 5%-5.25 percent -- its highest since August 2007.
In its statement following its meeting, the Fed hinted that it may pause its hikes. It omitted a sentence from the previous statement that stated that "the Committee expects that additional policy firming might be appropriate" to help the Fed achieve its 2% goal.