Central Banks Hike Rates Cautiously Amid Energy Price Uncertainty

Central banks around the world are taking a cautious approach to raising interest rates as they navigate the challenges posed by higher energy prices and the impact of artificial intelligence on their economies.

The Federal Reserve's decision to leave interest rates unchanged this week, despite Fed chief Kevin Warsh pledging an 'unwavering commitment' to bring down inflation, has sparked a bond market sell-off.

The Bank of England also kept its rates steady, while the Bank of Japan faces a dilemma on Friday. The Reserve Bank of Australia has raised interest rates three times this year to 4.35%, the highest in the G10.

Markets see a further hike later this year as likely but not certain for the RBA. Norway's Norges Bank is expected to hold its policy rate unchanged at 4.25% after core inflation slowed in June.