Gloom pervades ahead of Fed meet's outcome

A look at the day ahead in European and global markets from Rae WeeMarkets 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 decisionUK CPI (May) Trying to keep up with the latest tariff news? Our new daily news digest offers a rundown of the top market-moving headlines impacting global trade. Sign up for Tariff Watch here.US crude oil price in USD per barrelHow inflation in the UK has moved(Editing by Muralikumar Anantharaman)