Published by Global Banking & Finance Review®
Posted on June 18, 2025
2 min readLast updated: January 23, 2026
Add as preferred source on GoogleMarket sentiment is low as investors await the Federal Reserve's rate decision amid geopolitical tensions and economic uncertainties.
A look at the day ahead in European and global markets from Rae Wee
Markets head into Wednesday's Federal Reserve rates decision with much uncertainty around the global economy, trade and geopolitical ties.
With the Israel-Iran air war entering a sixth day, the G7 wealthy nations struggling to find unity over the conflict in Ukraine, and more signs of fragility in the U.S. economy, the drumbeat of negative headlines offered little respite for investors.
U.S. President Donald Trump's call for Iran's unconditional surrender and comments from him suggesting a more aggressive stance toward Iran have also stoked worries of greater U.S. involvement.
It was again a risk-off tone in markets on Wednesday, with shares in Asia falling and the dollar buoyant.
Stock futures similarly pointed to a mostly lower opening in Europe, though oil prices steadied a little after surging more than 4% in the previous session.
It's an increasingly difficult line for Fed Chair Jerome Powell and his colleagues to tread given the challenging global backdrop, and much attention on the central bank's policy decision will be on its updated Summary of Economic Projections.
For now, markets are still pricing in two Fed cuts by December, but that could very well change should Powell strike a more hawkish tone later in the day.
Ahead of the Fed outcome, UK inflation data is also due on Wednesday, where consumer prices are expected to have slowed slightly in May after April's bigger-than-expected surge.
The reading comes ahead of a policy decision by the Bank of England on Thursday, where expectations are for the central bank to keep rates on hold.
Still, investors will be looking for hints on whether a slowing economy and weaker wage growth could speed up the pace of easing.
One of Britain's leading business groups on Wednesday slashed its forecast for economic growth in 2025 and next year due to headwinds from Trump's tariffs and an increase in payroll taxes, a survey showed.
Key developments that could influence markets on Wednesday:
- Federal Reserve rate decision
- UK CPI (May)
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(Editing by Muralikumar Anantharaman)
Markets are experiencing a risk-off tone, with shares in Asia falling and the dollar buoyant, reflecting uncertainty around the global economy.
Markets are currently pricing in two Fed cuts by December, but this could change if Fed Chair Jerome Powell adopts a more hawkish tone.
UK inflation data is due on Wednesday, with consumer prices expected to have slowed slightly in May after a significant surge in April.
The Bank of England is expected to keep rates on hold amid concerns over a slowing economy and weaker wage growth.
Geopolitical tensions, such as the ongoing Israel-Iran conflict and the situation in Ukraine, are contributing to the current market uncertainty.
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