Fed Hike Odds High as BOE Leaves Rates Unchanged Amid Inflation Pressures

The Federal Reserve's interest rate decision on Wednesday is being closely watched by investors, with a 90% probability of a 25 basis point hike. This comes after a stronger-than-expected non-farm payroll report and higher than expected core CPI at 0.3% month-on-month.

Oil prices above $100 a barrel due to Middle East hostilities are adding to inflationary pressures. A rate hike could result in increased profitability for banks, but also means borrowing costs rise, loan demand weakens, credit risks increase and economic growth slows.

The Bank of England is expected to leave interest rates unchanged at 3.75%, with a focus on the vote split. A more hawkish split could signal that the central bank is prepared to keep rates higher for longer, affecting consumer spending and discretionary stocks like Next.