Global markets have their eyes on the three major central banks this week

While the effects of high energy prices on the inflation outlook on a global scale and concerns about the sustainability of artificial intelligence investments are followed by investors, the interest rate decisions to be announced by the three major central banks have become the focus of the markets.

Concerns that ongoing tensions in the Middle East may escalate again have recently pushed energy costs up. Predictions that the increase in oil prices may accelerate inflation again and that central banks may keep interest rates higher for longer than expected are getting stronger.

The Fed's interest rate decision will be announced on Wednesday, October 28, the ECB's decision will be announced on Thursday, October 29, and the BoJ's decision will be announced on Friday, October 30. While the Fed, ECB and BoJ are expected to keep policy rates constant at their meetings this week, the possibility that these banks may increase interest rates in December remains strong.

The messages that banks will give in their decision texts and the monetary policy signals for the next period are also expected to be decisive on the direction of asset prices.

As the most influential monetary authority at the center of the global financial system, the Fed also has the power to direct other central banks.

From this perspective, the steps the Fed will take, and especially the verbal guidance given by Fed Chairman Kevin Warsh, are expected to affect the course of financial conditions on a global scale.

The forward-looking policies to be presented at this meeting of the Fed, which increased the policy rate by 25 basis points to the range of 3.75-4 percent in September, are important in terms of inflation outlook and interest rate expectations.

Analysts stated that the high rate of inflation in the USA limits the expectations of loosening in monetary policy and strengthens the assessments that interest rates may remain high for a long time, and therefore the statements in the Fed's decision text regarding inflation risks and the possibility of additional tightening will be carefully followed in terms of dollar and US bond yields.

Source: TRT Haber Ekonomi RSS (Open Press / Translated Full Text)