Fed, ECB, BoJ Decide Rates This Week as Oil Fuels Inflation Fear
(MENAFN) Three of the world’s most powerful central banks will announce interest rate decisions this week as surging energy prices, Middle East tensions and doubts over the payoff from massive artificial intelligence (AI) spending rattle investors.
The US Federal Reserve, the European Central Bank (ECB) and the Bank of Japan (BoJ) all meet against a backdrop of renewed inflation risk. Energy costs climbed further on fears of fresh escalation in the Middle East, a rise expected to reignite price pressures and keep borrowing costs elevated for longer.
Fed: Wednesday
The Fed announces its decision Wednesday. Because it can steer the direction of other central banks, the moves and guidance from Chair Kevin Warsh will help set the course for global financial conditions.
The bank lifted its policy rate by 25 basis points last month to a range of 3.75%-4%. Stubbornly high US inflation has curbed hopes of monetary easing and strengthened forecasts that rates will stay high for an extended period. Analysts are also weighing the chance of further tightening and what it could mean for the US dollar and Treasury yields.
ECB: Thursday
The ECB reports Thursday, with eurozone inflation, the growth outlook and the effect of rising energy prices on price stability set to dominate discussion. The bank raised its three key policy rates by 25 basis points in September. It is expected to hold steady at this meeting, but bets on hikes at later meetings remain strong given elevated oil prices and inflation risks.
Pressure is also building in France, where escalating protests continue to threaten public finances and drive selling in French government bonds. The country’s 10-year yield climbed to 5.07%, its highest since 2002 and above the US 10-year Treasury yield for the first time since 2013.
In Germany, the Producer Price Index (PPI) rose 1.9% month-on-month in September and 6.7% year-on-year. Both readings beat estimates and outpaced August, and the annual gain was the fastest since March 2023.
BoJ: Friday
The BoJ decides Friday, after raising its policy rate to 1.25% last month. Higher oil prices stemming from Middle East tensions are stoking energy and inflation worries, particularly for energy-importing Asian economies.
Japan’s annual inflation hit 2.1% in September, matching forecasts, while core inflation topped 2% for the first time in nine months, bolstering hawkish expectations. Exports jumped 16.7% year-on-year in September, driven by strong demand for semiconductors and AI products, though the figure missed estimates and slowed from August.
The BoJ is expected to hold rates this week, with a possible hike in December. Its policy path will hinge on the outlook for inflation, wages and economic activity.
The US Federal Reserve, the European Central Bank (ECB) and the Bank of Japan (BoJ) all meet against a backdrop of renewed inflation risk. Energy costs climbed further on fears of fresh escalation in the Middle East, a rise expected to reignite price pressures and keep borrowing costs elevated for longer.
Fed: Wednesday
The Fed announces its decision Wednesday. Because it can steer the direction of other central banks, the moves and guidance from Chair Kevin Warsh will help set the course for global financial conditions.
The bank lifted its policy rate by 25 basis points last month to a range of 3.75%-4%. Stubbornly high US inflation has curbed hopes of monetary easing and strengthened forecasts that rates will stay high for an extended period. Analysts are also weighing the chance of further tightening and what it could mean for the US dollar and Treasury yields.
ECB: Thursday
The ECB reports Thursday, with eurozone inflation, the growth outlook and the effect of rising energy prices on price stability set to dominate discussion. The bank raised its three key policy rates by 25 basis points in September. It is expected to hold steady at this meeting, but bets on hikes at later meetings remain strong given elevated oil prices and inflation risks.
Pressure is also building in France, where escalating protests continue to threaten public finances and drive selling in French government bonds. The country’s 10-year yield climbed to 5.07%, its highest since 2002 and above the US 10-year Treasury yield for the first time since 2013.
In Germany, the Producer Price Index (PPI) rose 1.9% month-on-month in September and 6.7% year-on-year. Both readings beat estimates and outpaced August, and the annual gain was the fastest since March 2023.
BoJ: Friday
The BoJ decides Friday, after raising its policy rate to 1.25% last month. Higher oil prices stemming from Middle East tensions are stoking energy and inflation worries, particularly for energy-importing Asian economies.
Japan’s annual inflation hit 2.1% in September, matching forecasts, while core inflation topped 2% for the first time in nine months, bolstering hawkish expectations. Exports jumped 16.7% year-on-year in September, driven by strong demand for semiconductors and AI products, though the figure missed estimates and slowed from August.
The BoJ is expected to hold rates this week, with a possible hike in December. Its policy path will hinge on the outlook for inflation, wages and economic activity.
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