Central Banks Turn Hawkish as Energy Costs Surge and Inflation Remains Elevated

Central banks around the world are adopting a more hawkish tone as energy costs surge and inflation remains elevated. The European Central Bank raised interest rates by 25 basis points on Thursday, following hot July inflation data. Several major central banks will meet next week, with markets expecting at least one rate hike.

The Reserve Bank of Australia has hiked rates three times this year to 4.35%, and there's a strong possibility of another increase later this month. The country's economy grew at a slower pace in the second quarter than expected, but inflation remains a concern.

The Federal Reserve meeting next week is also highly anticipated, with markets pricing in over a 50% chance of a rate hike. Recent economic data and comments from Fed officials have shifted expectations towards a more hawkish policy outlook.