European Stocks Rise Cautiously Ahead of U.S. Inflation Data

European stock markets edged higher on Wednesday, as investors awaited the latest U.S. inflation report, which could provide insight into the Federal Reserve’s monetary policy outlook.

At 03:05 ET (08:05 GMT):

• Germany’s DAX rose 0.2%
• France’s CAC 40 climbed 0.4%
• UK’s FTSE 100 gained 0.1%

U.S. Inflation Report in Focus

The upcoming U.S. Consumer Price Index (CPI) data is a key focus for global markets. The report is expected to show that headline inflation cooled on a month-over-month basis in January, while the annualized pace remains steady compared to December.

However, core inflation (which excludes food and fuel) is anticipated to rise slightly from the previous month, reinforcing concerns over persistent price pressures.

In December, consumer prices rose 2.9% year-on-year, exceeding the Federal Reserve’s 2% target. This will be the final inflation report before the full impact of President Donald Trump’s new tariffs—which took effect this month—can be assessed.

Fed Chair Jerome Powell testified before the Senate on Tuesday, reaffirming that the central bank is in no rush to adjust interest rates. He will continue his testimony before the House Financial Services Committee later today.

ECB Signals More Rate Cuts Ahead

In Europe, the European Central Bank (ECB) recently cut interest rates for the fifth time since June and signaled that further easing remains on the table due to weak economic growth.

A recent ECB paper suggested that the central bank may still be several rate cuts away from reaching a level where policy stops restraining economic expansion.