Global Rate Hikes Loom as Inflation Pressures Mount Across G7

Central banks from across the Group of Seven face a crucial week as rising inflation pressures mount and threaten to spark rate hikes. The US Federal Reserve will make its decision on Wednesday, followed by peers in the UK and Japan. The Fed's decision is particularly closely watched after a higher-than-expected core inflation reading last Friday.

A hike in interest rates is now widely anticipated in the US, despite President Donald Trump's wishes for lower rates. Bank of England officials are also expected to keep borrowing costs steady this week, but with three votes in favor of a rate increase at their last meeting and price risks simmering, a move towards a hike as soon as November cannot be excluded.

The Bank of Japan is widely predicted to raise its key interest rate at the end of the week after supportive data, including a jump in wages. The European Central Bank has already tightened policy this week, with investors expecting an increasingly synchronized hawkish stance across the G7.