A look at the day ahead in European and global markets

By Tom Westbrook, Deputy Financial Markets Editor

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Kevin Warsh wraps up his first Federal Open Market Committee meeting with tumbling oil prices and a tentative peace offering a helpful backdrop for leaving interest rates on ‌hold, as traders expect.

Federal Reserve Chair Kevin Warsh delivers a speech on the day of his swearing-in ceremony, in the East Room of the White House in Washington, D.C., U.S., May 22, 2026. REUTERS/Evelyn Hockstein/File Photo

Market focus will be on how he votes, his news conference and how he navigates explaining the outlook.

Warsh is not a fan of "forward guidance", and may choose to refrain from offering a projection for interest rates as part of the quarterly economic outlook the U.S. central bank publishes.

But he was picked by U.S. President ⁠Donald Trump to cut rates and, with inflation above target and employment solid, markets expect a hike. So he will be asked about it and the dollar has been dithering this week, waiting to hear from him.

If he does not push back on market pricing, investors might take that as a hawkish signal. But if he does, then investors might worry about inflation - leaving a delicate task.

Graphics are produced by Reuters

He'll also have to face a boardroom where his predecessor, Jerome Powell, still has a vote.

Perhaps the Bank of Japan's Deputy Governor Shinichi Uchida offered a template ‌of a ⁠steady hand on Tuesday. He managed to preserve policy flexibility without spooking markets.

 Uchida did have a bit of extra help from Japan's finance ministry, which is lurking just off-stage with threats to intervene in the currency market, should the yen fall again.

Asian markets traded mostly sideways on Wednesday, with Warsh ⁠the main show in town and sellers of oil taking a breather to wait for confirmed details of the U.S.-Iran agreement.

Brent futures have sunk below $80 a barrel on reports the U.S. plans lifting sanctions on ⁠Iranian oil. Other than the Fed show on Wednesday, Sweden's Riksbank is expected to be on hold but signal a hike could be coming later this year.

British inflation is seen creeping ⁠up to 3% thanks to higher oil prices, while final European readings are not expected to deviate from preliminary figures.