Rate Hikes and Energy Prices Dominate Financial Markets

The upcoming week in financial markets is expected to be pivotal, with key interest rate decisions from the Federal Reserve and the Bank of Japan.

Markets are waiting for Wednesday's announcement from the Fed, which has kept rates unchanged throughout 2026. Some investors remain unconvinced that a quarter-point increase will happen now, despite growing bets on a hike after new Fed Chair Kevin Warsh struck a hawkish tone and the hot August jobs report.

The Bank of Japan is also set to raise interest rates by 25 basis points to 1.25% on September 18, the highest level in over three decades. However, investors are looking beyond this decision, with some analysts predicting further rate hikes in October and December.

Rising energy prices, particularly oil, have been a significant concern for central bankers. Brent crude has surged back above $100 a barrel for the first time since July, while natural gas prices in Europe are at their highest level since late 2022.