A look at the day ahead in European and global markets

By Rae Wee, Correspondent

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The U.S. Federal Reserve kicks off its two-day policy meeting later on Tuesday where an interest rate cut is all but priced in, at a time when the central bank faces unprecedented pressure from the White House over the direction of monetary policy.

The U.S. Senate on Monday narrowly confirmed Stephen Miran to the Fed's Board of Governors, handing President Donald Trump's top economic adviser one of 12 interest rate-setting votes on the eve of the policy meeting. Miran will join the meeting pending completion of paperwork and his swearing-in.

Stephen Miran, U.S. President Donald Trump's nominee to be chairman of the Council of Economic Advisers, sits on the day he testifies during a Senate Banking, Housing and Urban Affairs Committee confirmation hearing on Capitol Hill in Washington, D.C., U.S., February 27, 2025. REUTERS/Annabelle Gordon

Also able to attend the meeting - absent a last-minute Supreme Court intervention - is Fed Governor Lisa Cook after a U.S. appeals court on Monday said Trump could not fire her.

Markets hardly reacted to the news yet the developments were a reminder of how Trump is putting his stamp on the bank and reshaping its standing in the eyes of the public and peer institutions, and influencing policy and other decisions.

Ahead of Wednesday's Fed outcome, markets were largely in wait-and-see mode, with stocks scaling fresh highs in Asia while the U.S. dollar struggled to make headway.

Markets have fully priced in a 25 basis-point cut with some pricing in a slim chance of a 50 bp move, against a backdrop of Trump calling for the Fed to deliver a "bigger" cut.

Graphics are produced by Reuters.

The Fed aside, investors will also have UK labour market data and U.S. retail sales figures to chew on later on Tuesday.

Still-elevated wage growth in Britain continues to be a source of concern for the Bank of England, even as the broader labour market shows signs of cooling.

Overall average weekly earnings, excluding bonuses, likely grew 4.8% over May-July, versus 5.0% for April-June, while the unemployment rate is forecast to have stayed steady at 4.7%.

The BoE is widely expected to keep its benchmark interest rate on hold later this week as the rate of inflation creeps up, but is likely to cut once next quarter and again early next year, showed a Reuters poll of economists.