FTSE down 0.68%; DAX down 0.02%; CAC 40 down 0.56% (Il Sole 24 Ore Radiocor) - New York, 18 Sep - European shares closed lower as caution prevailed ahead of the Federal Reserve's policy decision later today.

The US central bank is widely expected to cut interest rates for the first time in over four years and to signal the start of an easing cycle 's policy decision as it concludes its two-day policy meeting later today.

Traders are however split over how much the Fed will cut rates, although chances of a 50-basis-point reduction have been rising in recent days.

The markets are currently pricing in a 65% chance for a 50 bps cut and a 32% chance for a 25 bps cut, according to the CME FedWatch Tool.

Investors will also look to chair Jerome Powell's comments for clues about the Fed's future monetary policy path.

The latest US consumer price index showed annual inflation had grown at 2.5% in August, well down on the previous 2.9% and its lowest rate since early 2021.

Traders also looked ahead to the Bank of England's latest monetary policy decision tomorrow.

Also on the data front, the annual inflation rate in the eurozone decreased to 2.2% in August from 2.6% the previous month and 5.2% the year earlier, according to figures from European Union statistical office Eurostat.

The figure was in line with a preliminary estimate released August 30. Last Thursday the European Central Bank's slashed rates again by 25 basis points, bringing its key interest rate to 3.5% and marking its second rate cut this year after a similar move in June.

The London FTSE 100 closed down 0.68% at 8,253.68 points, the Frankfurt DAX fell 0.02% at 18,727.17 points, the Paris CAC 40 lost 0.56% at 7,444.90 points, while in Milan the FTSE MIB dropped 0.37% at 33,655.49 points, and in Madrid the IBEX 35 closed 0.09% lower at 11,692.45 points.

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(RADIOCOR) 18-09-24 18:08:28 (0610) 5 NNNN