Energy Price Surge Sparks Market Uncertainty as Central Banks Meet

Central banks are on high alert this week as rising energy prices and US tariffs add to market uncertainty. The price of oil has surged above $100 a barrel for the first time since May, sending shockwaves through markets. The Houthi attacks in the Middle East have disrupted shipping routes, leading to concerns about supply chain disruptions.

The US Federal Reserve is widely expected to hold rates steady on Wednesday, but uncertainty remains high as rate rises might be in order at some point. Recent consumer and producer price data that were cooler than market participants expected helped calm rate-hike bets, but a resurgence in oil prices means traders are raising their bets again.

The Bank of Japan meets on Friday, with much riding on policymakers to deliver a hawkish message that could haul the yen away from a four-decade low against the US dollar. The BOJ is under pressure to raise rates at a faster pace than the dominant market view if price pressure from a weak yen and rising energy costs persist.