US, UK and Japan to make rate decisions this week
The central banks of the United States, the United Kingdom and Japan will make interest rate decisions this week amid accelerating inflation and volatility in global bond markets. The Guardian reports.
Federal Reserve decision
The US Federal Reserve will announce its decision on Wednesday. Investors will watch whether the new Fed chair, Kevin Warsh, can resist President Donald Trump’s demands to cut rates. Trump has repeatedly called for lower interest rates and said the US rate should be the lowest in the world.
At the same time, the Fed’s Board of Governors is taking into account a renewed rise in oil prices following an escalation of the conflict between the United States and Iran. Last week, the price of a barrel of oil exceeded $100 for the first time since July. According to the publication, the Strait of Hormuz remained almost closed to tanker traffic, while Houthi advances along the Red Sea coast threatened oil supplies from Saudi Arabia.
Annual inflation in the United States, according to data released on Friday, remained at 3.4%. It has exceeded the Fed’s 2% target for more than five years.
More current news is available on the UA.News Telegram channel Telegram.
Expectations in the UK and Japan
The Bank of England is due to announce its decision on Thursday. Markets and economists expect the regulator to keep the rate at 3.75%. In July, three of the nine members of the Monetary Policy Committee supported a rate increase, while stronger-than-expected growth in the British economy could heighten inflation concerns.
Thomas Pugh, chief economist at consulting firm RSM, said that the jump in energy prices had significantly increased the likelihood of future rate hikes in the United Kingdom. Financial markets are pricing in four increases in the UK rate over the next 12 months; before the latest rise in oil prices, they had expected three.
The Bank of Japan will announce its decision on Friday. It is expected to raise the rate by 0.25 percentage points to 1.25%. That level would be the highest in more than 30 years. The European Central Bank already raised rates on Thursday, and ECB President Christine Lagarde said the conflict in the Middle East continues to create inflationary pressure.
