Fed Hike Looms as US Markets Tense Over Inflation and AI Fears

Financial markets are on edge as the US Federal Reserve meets to tackle high inflation. The Fed is expected to raise interest rates by 25 basis points, with investors pricing in a likely hike to combat persistently high consumer prices.

The yield on the 10-year U.S. Treasury note hit 5.03 percent, its highest level since 2007, as investors bet on a rate increase. Oil prices also climbed, with Brent crude futures pushing toward $110 a barrel, while average US diesel prices reached a record high of just under $6.27 a gallon.

The surge in energy costs has added pressure on central banks to raise borrowing costs, with the European Central Bank having already lifted interest rates last week. The Bank of England is forecast to keep its benchmark rate unchanged this Thursday, while the US Fed's decision could have implications for global markets.