Central Banks Turn Hawkish as Energy Costs Rise

Major central banks around the world are sounding more hawkish as energy costs continue to rise. Persistent inflation pressures and resilient economic growth have increased the risk of further rate hikes, particularly in countries with high or rising interest rates.

The European Central Bank recently hiked rates by 25 basis points, and next week's meetings at the Federal Reserve and Bank of Japan are highly anticipated events. Markets expect a more hawkish policy outlook from these central banks, which could lead to further rate hikes.

In Australia, the Reserve Bank has already hiked interest rates three times this year to 4.35%, and market expectations suggest another hike is likely later this month. In Norway, Norges Bank left rates unchanged at 4.25% in August but noted that inflation had softened. The economy grew at a slower pace than expected in the second quarter, and markets price in one more quarter-point hike by year-end.