Central Banks Face Inflation Pressures Amid Escalating Oil Prices

The Federal Reserve, Bank of England, and Bank of Japan are set to make key rate decisions in the coming days as energy-driven inflation risks escalate.

Crude oil prices have briefly crossed the $100 level on July 23, a mark it breached last two months ago, signaling inflation concerns for policymakers. The renewed hostilities in the Middle East has sparked fresh concerns and rallied oil prices.

The US Fed's rate decision on July 29 is expected to be closely watched, with some analysts predicting a hawkish tone despite soft June consumer price data. Dallas Fed President Lorie Logan and Cleveland's Beth Hammack are seen as favoring a rate hike, while there is widespread chatter about whether Fed Chairman Kevin Warsh would like to pull off a surprise.

The Bank of England is expected to keep rates unchanged on Thursday, although a minority faction may vote to hike borrowing costs. Investors will also be closely watching the Bank of Japan's policy decision and data from Japan, including industrial output, retail sales, and jobless data for June, as well as inflation figures for July.