Rate Hike Anticipation Rises Amidst Middle East Tensions and Energy Price Surge

Policy makers at the Federal Reserve and the Bank of Japan are gearing up for key interest rate decisions amidst rising tensions in the Middle East and increasing energy prices. The Fed is expected to raise rates, with markets leaning towards a quarter-point increase, but some investors remain skeptical. New Fed Chair Kevin Warsh has taken a hawkish tone, and a hot August jobs report has added to the suspense.

The Bank of Japan is likely to raise rates by 25 basis points to 1.25%, a level not seen in over three decades. The bigger question is what comes next, with analysts predicting further rate hikes in October and December. The yen's recent rebound has eased pressure on the BOJ to prop up the currency.

Rising energy prices are also fueling inflation concerns, with Brent crude surging above $100 a barrel for the first time since July. Physical oil prices have reached record highs, while diesel and jet fuel prices are nearing their peaks from earlier this year.