European markets watch Fed decision, U.S. inflation data

LONDON — European stocks were higher Wednesday ahead of the latest U.S. Federal Reserve decision and inflation reading.

The pan-European Stoxx 600 was 0.53% higher at 9:11 a.m. London time, with most sectors in the green.

Banking stocks led gains and were last 1.36% higher, while autos fell 0.72%.

Data out of the U.K. on Wednesday showed that the country’s economic growth was flat in April as construction output declined for the third month in a row. The monthly gross domestic product reading was in line with expectations, but was lower than March’s 0.4% expansion.

Elsewhere, the U.S. Federal Reserve’s decision on Wednesday will come hours after the country’s May inflation report.

The central bank is expected to maintain its benchmark overnight borrowing rate in a range between 5.25% and 5.5%, the market will be watching for updates to the Fed’s economic projections, which could clarify the path for policy. Investors have grown increasingly concerned that the recent strong jobs report and sticky inflation support a higher-for-longer interest rate environment.

The latest consumer price index print, a broad measure of goods and services costs, is forecast to show just a 0.1% increase from April and a 3.4% rise on a year-over-year basis.

U.S. stock futures hovered near the flatline Tuesday night, while Asia-Pacific markets were mixed as investors assessed inflation data from around Asia.