European stocks mixed; Fed meeting, eurozone CPI prompts caution

investing.com:

Investing.com — European stock markets traded in a mixed fashion Tuesday, as investors await the start of the crucial two-day U.S. Federal Reserve policy meeting as well as the release of more inflation data from the eurozone.

At 03:50 ET (07:50 GMT), the DAX index in Germany traded 0.1% lower, while the CAC 40 in France climbed 0.1% and the FTSE 100 in the U.K. traded 0.1% higher.

Trading is taking places in tight ranges Tuesday as investors cautiously await news from Washington as Federal Reserve policymakers begin discussing their response to the U.S. economic outlook.

The U.S. central bank is widely expected to keep interest rates steady at a range of 5.25% to 5.50% when the meeting concludes on Wednesday, after raising them at 11 of its past 12 meetings in a bid to cool inflation. 

But markets are not in full agreement whether the Fed will be done as of now or whether it will raise rates one more time this year, as inflation still remains above its 2% target.

Back in Europe, the eurozone’s final inflation figures for August are due later in the session, and are expected to confirm that CPI rose 0.6% on the month, a rise of 5.3% on an annual basis.

This is still substantially above the European Central Bank’s 2% medium term inflation target, hence the central bank’s interest rate hike last week. But core inflation, which excludes volatile energy and food prices, is seen falling to 5.3% from 5.5% annually.

The ECB raised its deposit rate to a record high 4% last week but also hinted at a pause in its rate-hiking cycle as the policymakers assess the impact of the numerous interest rate increases on the region’s economy.

Officials will need until March to be sure that last week’s rise was the last and further rate hikes