The Federal Reserve, Bank of England and Bank of Japan are preparing for pivotal rate decisions this week, as a renewed surge in oil prices and instability in global bond markets have pushed inflation back to the centre of monetary policy. The Fed meets on Wednesday, the BoE on Thursday and the BoJ on Friday. Investors will judge whether each institution can contain rising prices without worsening strain in economies already facing geopolitical uncertainty.
Oil prices put the Fed’s resolve under the spotlight
Kevin Warsh, President Donald Trump’s newly appointed Federal Reserve chair, is at the centre of that scrutiny. His challenge is not simply to choose between rate cuts and increases. He must also persuade governors to act decisively while inflation remains well above the central bank’s 2% target.
Trump has repeatedly demanded lower borrowing costs and recently intensified his public pressure on the central bank. In a Truth Social post this month, he said the US should have the “LOWEST RATE of any country in the World”. He added: “The Fed Board, with its great new leader, must get smart – BE PATRIOTS for a change.”
The political pressure arrives as the cost of a barrel of crude moved above $100 last week for the first time since July. Tanker traffic through the Strait of Hormuz remained all but closed while Houthi rebels advanced along the Red Sea coast, threatening to disrupt Saudi oil supplies. Prices eased slightly on Friday amid hopes of renewed talks to reopen the waterway, but they remained far above summer levels.
Higher energy costs are expected to feed another rise in US inflation, which has exceeded the Fed’s target for more than five years. Warsh warned in a speech this month that, without continued progress towards the goal, Fed policymakers would
