Central Banks Gear Up for September Meetings Amid Middle East Tensions

Central banks around the world are preparing for their September policy meetings as geopolitical tensions in the Middle East escalate energy price pressures and complicate the global inflation and growth outlook.

The US Federal Reserve, European Central Bank, and Bank of Japan will set market expectations for the coming months with forward guidance likely to draw significant attention alongside their decisions.

Rate-cut expectations had strengthened as disinflation accelerated across many economies but shifted toward more hawkish projections after energy shocks began in February when the Middle East war broke out.

The Fed's September meeting is a major event for global markets, with a 63% probability of keeping its policy rate unchanged next month and strong expectations for one rate hike by the end of the year.