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Global markets enter a pivotal week as investors await the Federal Reserve's interest-rate decision on Wednesday. Fed funds futures indicate markets are leaning towards a 25-basis-point rate hike, although conviction remains mixed. The Fed has kept rates unchanged throughout 2026. Expectations for a hike increased after new Fed Chair Kevin Warsh adopted a hawkish tone and August employment data came in stronger than expected. The key focus will be on what Warsh signals about the path for rates beyond this meeting. (Source: Reuters) The Bank of Japan is widely expected to raise its policy rate by 25 basis points to 1.25% on September 18, according to market expectations. The bigger question for investors is what comes next. Markets are already looking towards the BOJ's October and December meetings, with swaps pricing in rates reaching 1.5% by January. The yen will remain a key factor. A recent recovery in the currency has eased pressure on the BOJ, but any renewed unwinding of yen-funded carry trades could trigger volatility across global markets. Rising energy prices have emerged as another major challenge for central banks. Brent crude has climbed back above $100 a barrel, while physical oil prices have moved above $120. Diesel prices have reached record highs and jet fuel has approached April peaks. European natural gas prices have also surged to their highest levels since late 2022, with winter approaching. Extreme heatwaves have added to concerns about food inflation by damaging crops and pastures. Copper prices have also surged to record highs near $15,000 a tonne, increasing pressure on policymakers. BRICS leaders met in New Delhi on September 12-13, with India pushing the idea of connecting central bank digital currencies to make cross-border payments faster and cheaper. The proposal faces significant political hurdles, however. Relations between some BRICS members remain strained, while India has historically been cautious about deeper financial integration with China. BRICS has previously discussed alternatives to the US dollar, including a common currency. A CBDC-based payment network could be a more limited proposal, but any move that reduces reliance on the dollar is likely to attract market attention. Swedes head to the polls on Sunday in what is expected to be one of the country's closest elections in years. Prime Minister Ulf Kristersson's centre-right coalition has narrowed the advantage previously enjoyed by Magdalena Andersson's centre-left opposition, setting up a closely fought contest. Investors will also watch the role of the anti-immigration Sweden Democrats, who have supported Kristersson's government since 2022 and are seeking greater influence. Fiscal policy could become a key market issue, with tax cuts and additional spending promises putting government finances back in focus.
document fetched 2026-09-15 02:52