Focus on Fed as futures edge higher ahead of rate decision

© Reuters. FILE PHOTO: Traders work on the floor of the New York Stock Exchange (NYSE) in New York City, U.S., June 13, 2022. REUTERS/Brendan McDermid/File Photo

(Reuters) - U.S. stock index futures inched higher on Wednesday as investors waited to see how high the Federal Reserve would raise interest rates to quell inflation at its policy meeting.

Investors have dramatically raised their bets of a 75 basis points (bps) rate hike, rather than 50 bps, following hotter-than-expected consumer prices data last week, fueling a selloff across global markets.

The European Central Bank said earlier its rate-setting Governing Council would hold a rare, unscheduled meeting to discuss the recent selloff in government bond markets, sending European stocks 1% higher. (EU)

Traders are currently pricing in a more than 94% chance of a 75 basis point hike, up from 8.2% a week ago, according to CME's FedWatch Tool. Such a big hike would lift the Fed's short-term target policy rate to a range of 1.5% and 1.75%.

The central bank will release its statement at 2 p.m. ET (1800 GMT), with a press briefing by Fed Chair Jerome Powell expected at 2:30 p.m. ET.

"75bps is already built into prices now, and if the guidance is more modest in scope, the buy-the-dippers will be out in force for the rest of the week," said Jeffrey Halley, senior market analyst at OANDA.

Escalating concerns around inflation, aggressive tightening by central banks, the Ukraine war and China's COVID-19 restrictions have walloped global equities this year.

The benchmark S&P 500 index on Monday marked a more than 20% decline from its most recent record high, confirming a bear market began on Jan. 3, according to a commonly used definition.

At 06:50 a.m. ET (1050 GMT), Dow e-minis were up 108 points, or 0.36%, S&P 500 e-minis were up 20 points, or 0.54%, and Nasdaq 100 e-minis were up 75.25 points, or 0.67%.

Among stocks, U.S. shares of Baidu Inc (NASDAQ:BIDU) rose 3.6% in premarket trading after Reuters reported the Chinese internet search engine giant is in talks to sell its controlling stake in iQIYI Inc in a deal that could value iQIYI at about $7 billion.

Qualcomm (NASDAQ:QCOM) firmed 0.6% after winning its fight against a 997 million euro ($1.05 billion) fine imposed by EU antitrust regulators four years ago.

Cryptocurrency stocks including Hut 8 Mining, Coinbase (NASDAQ:COIN) Global and Riot Blockchain (NASDAQ:RIOT) fell as Bitcoin extended a selloff, dropping 6.9 %to December 2020 lows.