Global Stocks Rise Ahead of US Rate Decision Amid Inflation Fears

Global stock markets edged higher on Wednesday ahead of the US Federal Reserve's decision on interest rates. The move is expected to support the dollar and combat rising inflation, which has driven government bond yields to multi-decade highs.

Oil prices have been a major driver of inflation, remaining above $100 a barrel due to the Middle East crisis. Brent North Sea Crude dropped 1.0% to $107.64 per barrel, while West Texas Intermediate fell 1.7% to $104.06 per barrel.

The Fed is widely tipped to raise interest rates by 25 basis points for the first time since July 2023, in response to robust jobs creation and high consumer prices in the US. This decision will be followed by the Bank of England on Thursday, which is expected to leave its benchmark rate unchanged due to weak UK economic growth.

Investors are also watching a planned summit between Trump and Xi Jinping, with reports that they could agree to some tariff reductions. As markets price in another interest rate increase by the end of the year, Fed chairman Kevin Warsh added to expectations with his hawkish speech at Jackson Hole, Wyoming last month.