The FTSE 100 ( ^FTSE ) and European stocks lost ground on Wednesday as traders awaited the latest data on US inflation, which could be key to the Federal Reserve’s next interest rate decision.

Economists at Deutsche Bank believe that the consumer price (CPI) index will tick down slightly from last month to 0.26%, which would keep the year-on-year reading at 3.3%. For headline inflation, they expect this to come in at 0.20%, with the year-on-year reading up a tenth to 2.5%.

Markets are now seeing a 62% chance of an interest rate cut at the Fed’s next meeting in December, down from 77% a week ago and 84% a month ago, according to CME Group.

Ipek Ozkardeskaya, senior analyst at Swissquote Bank, said: "The CPI data has regained importance since Donald Trump was re-elected president of the US. Jobs data remains crucial for the Fed’s policy path, as the last thing the Fed wants is to panic and lose control of the situation, but the Fed’s victory over inflation looks more vulnerable today than it did a month ago. And that’s supportive of the US dollar.

"Of course, October figures won’t tell much about the Trump effect on consumer prices. We must wait a few months before we start seeing the impact of Trump on numbers. But the higher the numbers, the lower the December cut expectations."

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