Global Central Banks Gear Up for 'Super Week' Rate Decisions Amid Oil Price Surge

Central banks around the world are bracing for what's being called 'Super Week', as the Federal Reserve prepares to announce its first interest rate hike in over three years. The Fed will conclude its two-day meeting and announce a decision on Wednesday, with market pricing showing a 89% probability of a 25-basis-point increase.

Goldman Sachs and HSBC both expect a rate hike, citing the need for further tightening to alleviate inflationary pressures. However, uncertainty persists, with some analysts arguing that the shock of aggressive tightening could push the Fed toward a 'hawkish hold', keeping rates unchanged while signaling future hikes.

The surge in oil prices is also reinforcing tightening expectations, with U.S. gasoline prices reaching their highest level since May and diesel prices breaching $6 per gallon for the first time. The Bank of Japan is expected to announce a 25-basis-point hike on Thursday, pushing its benchmark rate to its highest level in 31 years.

The Bank of England is likely to hold its benchmark rate at 3.75%, but markets are watching for signals about future policy, particularly whether the hawkish minority will expand following the oil shock.