London, Nov. 4 (Bloomberg) -- The Federal Reserve, Bank of England and European Central Bank are prepared to lower interest rates for the first time this year amid a convergence of economic data pointing to rising unemployment, declining confidence among consumers and executives and little prospect of faster inflation. In the financial futures market, speculators are signaling a quarter percentage point cut in the overnight cost of borrowing between U.S. banks to 1.5 percent. Futures trading also suggests a quarter point cut by the ECB, to 3 percent, and a reduction of the same size by U.K. policy makers, to 3.75 percent. ``As recently as 10 days ago, no one thought any of the three central banks would cut rates,'' said Andrew Milligan, head of global strategy at Standard Life Investments in Edinburgh, which manages about $124 billion. ``Positions have shifted.''
That's mostly because of mounting evidence the global economy is slowing. Governments in France and the U.S. reported last week that unemployment rose while U.S. consumer confidence, the most closely watched measure this year of economic health, plunged to a nine-year low in October. German business leaders were more pessimistic last month than at any time since January. Alan Greenspan and the 11 other voting members of the Fed's policy panel will probably trim borrowing costs when they meet on Wednesday, Fed funds futures contracts due this month indicate. In June, the yield was as high as 2.27 percent, showing investors expected a half-point increase.
Twenty of 22 primary dealers, firms that trade directly with the Fed, predicted policy makers will trim the target for overnight loans between banks, a Bloomberg News survey Friday showed. Two months ago, only eight forecast a cut this year. //www.quote.bloomberg.com