MORNING BID-Mini budget, major turmoil

The International Monetary Fund came out to openly criticise Britain's new economic strategy, saying the proposals are likely to increase inequality. Moody's warned that unfunded tax cuts were credit negative.

A look at the day ahead in European and global markets from Anshuman Daga What was meant to be a mini-budget is still thundering across financial markets.

While British finance minister Kwasi Kwarteng remarked on Sunday that he was focused on growth, not market moves following the carnage in the pound and bond prices, everyone else is warning about the repercussions of his economic proposals. The International Monetary Fund came out to openly criticise Britain's new economic strategy, saying the proposals are likely to increase inequality.

Moody's warned that unfunded tax cuts were credit negative. The sterling continued to bear the wrath of investors and languished near a record low on Wednesday despite the Bank of England's chief economist saying the bank is likely to deliver a "significant policy response," but only in November.

Asian stocks markets and currencies extended their downward journey, burdened by the gloomy growth outlook, while dollar bulls pushed the currency to yet another two-decade high. Though central bankers have been trying to balance inflation and recessionary risks, their recent tone and "jumbo" rate hikes have reinforced that controlling inflation is the top priority, even at the potential cost of a recession, BofA analysts said.

"Indeed a recession in Europe in particular is already well anticipated, with 92% of our European Fund Manager survey respondents expecting one in the coming 12 months," BofA said. Elsewhere, the energy crisis in Europe intensified as European authorities investigated what Germany, Denmark and Sweden said were attacks which had caused major leaks into the Baltic Sea from two Russian gas pipelines.

The energy crisis between Europe and Moscow has already battered major Western economies, sent gas prices surging and sparked a hunt for alternative supplies. Key developments that could influence markets on Wednesday:

ECB chief Lagarde takes part in a panel discussion Fed's Thomas Barkin, Michelle Bowman, James Bullard and Charles Evans all speak at events

Economic data: US Aug pending homes index

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