Business Lookahead: The last mile

STORY: From a potential third straight rate cut from the U.S. Fed to whether services sectors are on shaky ground, these are the stories to watch in business and finance in the coming week.

:: Cut, and then what?

The U.S. Federal Reserve is expected to continue monetary easing with a 25 basis point rate cut on Wednesday.

That would be its third straight reduction.

Focus will be on Fed Chair Jerome Powell for any insight about his expectations for future easing.

:: Hike on hold?

The pendulum of Bank of Japan policy expectations has swung widely in the last two weeks, tying traders in knots ahead of a Dec. 19 rate decision.

One mooted risk is that the Fed surprises by not cutting rates the day before.

But analysts note it would be very rare for the Fed to go against the grain when market conviction for a cut is so strong.

:: Time for a BoE surprise?

Traders expect the Bank of England to hold rates at 4.75% on Thursday.

Employer tax hikes in the Labour government’s October budget motivated big businesses to warn of price rises… that fueled inflation concerns and helped propel sterling to 2-1/2 year highs against the euro.

UK employment growth is slowing as tax rises deter hiring plans… and consumer confidence is weak.

Sterling bulls should watch out for the BoE shifting gears.

:: Shakier ground

Once-robust services sectors across big economies are faltering, bringing a divergence with sluggish manufacturing activity to an end.

That was the takeaway from November PMIs. December numbers, out across the globe next week, should show if the slowdown is getting deeper.

Though, for some observers, the PMI data paints too pessimistic a picture of underlying activity, with falling interest rates helping to bolster sentiment.