US, UK, and Japan face pivotal rate decisions as oil prices and bond yields surge

Three of the world’s most influential central banks are lining up rate decisions in a single week. The Federal Reserve kicks things off on September 16, followed by the Bank of England on September 17 and the Bank of Japan on September 18, all while oil prices sit above $100 per barrel and bond yields are flashing levels not seen in nearly two decades. Global inflation has been reignited by the US-Iran conflict’s effect on energy supply chains. Brent crude has climbed to $108 per barrel, and the ripple effects are showing up in consumer price data across every major economy. The Fed’s first hike in years Markets are pricing in a high probability that the Federal Reserve will raise rates by 25 basis points on September 16. If it happens, it would be the first hike since the onset of pandemic-era monetary easing. The catalyst is straightforward: August’s core CPI reading came in hotter than expected. Ten-year US Treasury yields are nearing 5%, a level last touched in 2007. For context, these yields hovered around 1.5% as recently as 2021. The Bank of England’s balancing act The Bank of England held its policy rate at 3.75% in July, but the vote was a divided 6-3, signaling meaningful...