Inflation data keeps eyes on the Fed next Wednesday... rate hike expected
Attention focuses on the US Federal Reserve's decision next Wednesday amid inflation concerns and expectations of an interest rate hike.
Translated by Qiyas from الجريدة — Original source
Central banks in most Group of Seven countries are facing a pivotal week, as rising inflation risks intensify pressure on them to raise interest rates.
Three anticipated rate decisions could reshape the global monetary policy landscape for the rest of 2026 and beyond, beginning with the Federal Reserve’s expected decision on Wednesday, followed by those of its counterparts in the United Kingdom and Japan over the next two days.
Attention will focus heavily on the United States after Friday’s release of core inflation data came in above expectations. The data has fueled investor bets that Federal Reserve Chair Kevin Warsh and his colleagues will raise the benchmark interest rate, likely in defiance of President Donald Trump’s wishes.
The Bank of England is not expected to raise interest rates on Thursday. However, with three officials supporting such a move at its late July meeting and price risks persisting, a shift toward a rate hike as early as November cannot be ruled out.
Conversely, broad expectations indicate that the Bank of Japan will raise its key interest rate at the end of the week, following a series of supportive data releases, including the country’s largest wage jump in nearly three decades.
With oil prices stabilizing again above $100 per barrel and the war in the Middle East seemingly reigniting, policymakers’ hopes for a decline in global price pressures appear weak at present.
After the European Central Bank raised interest rates on Thursday—its second such move since the outbreak of conflict with Iran—the week may pass with the contours of an increasingly synchronized and hawkish monetary policy stance among G7 nations becoming clearer.
The Bank of Canada, the group’s other institution, is also moving in the same direction. Its policy statement from earlier this month, released on Wednesday, will be published; at that meeting, officials kept interest rates unchanged but emphasized inflation concerns.
Experts at Bloomberg Economics note that “the direct signal from the market is clear: investors want and expect the Federal Open Market Committee to raise interest rates. If it does not, Warsh will lose credibility in the eyes of market participants.”
