The pan-European Stoxx 600 hovered around the flatline in early trade, having recouped opening losses. Travel and leisure stocks fell 1.4% while oil and gas stocks added 2%.
Investors expect that the central bank will deliver its third consecutive 0.75 percentage point rate hike to tame high inflation at the conclusion of its latest two-day policy meeting Wednesday.
A higher-than-expected consumer price index reading in August and hawkish comments on rate hikes from Fed leaders have weighed on stocks, with more pressure likely ahead as the central bank continues to fight inflation.
Shares in the Asia-Pacific traded lower Wednesday, following Wall Street’s negative lead ahead of the expected rate hike, while U.S. stock futures were slightly lower Tuesday evening.
The Bank of England’s Monetary Policy Committee will announce its latest decision on Thursday, with analysts divided over whether to expect a hike to interest rates of 50 or 75 basis points.
The Bank faces a crucial choice as it navigates a plunging currency and the effects of a new government energy cost package that has changed the inflation outlook.
The Bank hiked by 50 basis points last month, its largest single increase since 1995, but some analysts believe it will need to up the ante and keep pace with global peers to prevent a capitulation of the currency.