G7 Central Banks Face Pressure to Raise Rates Amid Inflation Risks

Central banks from the Group of Seven (G7) face a pivotal week as mounting inflation risks force them to raise interest rates. The US Federal Reserve will make its decision on Wednesday, followed by peers in the UK and Japan.

The US will be closely watched after a higher-than-expected core inflation reading on Friday sparked investor bets that Fed Chairman Kevin Warsh and his colleagues will raise their benchmark rate.

Despite US President Donald Trump's wishes, investors see it as a near certainty that the US central bank will hike interest rates for the first time in three years. This had been building at the Fed even before the latest figures, with three officials dissenting against the decision to hold rates steady in July and instead preferring to hike.

The Bank of England is not expected to raise its rate on Thursday, but there's a possibility it may shift towards a hike as soon as November due to simmering price risks. The Bank of Japan, meanwhile, is widely predicted to raise its key rate at the end of the week after supportive data, including the nation's biggest jump in wages in nearly three decades.