Central Banks Turn Hawkish Amid Rising Energy Costs

Major central banks around the world have taken on a more hawkish tone as energy costs surge and economic growth remains resilient. This shift in stance is driven by persistent inflation pressures, which are now fueled by rising energy prices. The European Central Bank (ECB) has already hiked rates by 25 basis points this week.

The Reserve Bank of Australia (RBA) has increased interest rates three times this year to 4.35%, undoing last year's cuts entirely. Another hike is seen as likely, especially after the latest hot inflation print in July. Market expectations point towards a rate increase at their upcoming meeting later this month.

The Bank of England (BoE) is expected to keep rates unchanged next week at 3.75%, while markets price in a rate increase before year-end. In contrast, Governor Andrew Bailey has expressed caution, adopting a wait-and-see approach.