Oil surge above $100 puts central banks on alert
What's the story
The recent spike in crude oil prices, briefly crossing the $100 mark for the first time in two months, is raising alarm bells among policymakers. The development comes as central banks around the world prepare to announce their monetary policy decisions. The Federal Reserve will be first off the block on Wednesday, followed by Bank of England and Bank of Japan.
Policy reactions
G7 countries to show varying levels of concern
The Group of Seven (G7) countries are likely to show different levels of concern over the potential for energy-driven inflation.
This is despite no immediate action being expected from them.
The European Central Bank has already indicated its willingness to raise interest rates again, with market bets suggesting possible moves as early as September.
Inflation concerns
Investors closely watching impact of energy price hikes
Along with oil price hikes, other energy categories such as gas are also raising inflation concerns.
The impact of huge investment in artificial intelligence (AI) and US President Donald Trump's tariff plans after setbacks at the Supreme Court are also being closely watched by investors.
Meanwhile, global bond markets have reacted to these developments with yields rising across the G7 countries.
Economic indicators
Fed rate decision more awaited than expected
The upcoming Federal Reserve rate decision on July 29 is now more awaited than expected. This comes after June's consumer price data for the US was much cooler than anticipated.
However, renewed hostilities in the Middle East have changed the narrative with rising oil prices fueling expectations of dissent from some officials who favor a rate hike now.
Regional focus
Asia-Pacific region gearing up for busy week ahead
The Asia-Pacific region is also gearing up for a busy week with key monetary policy decisions and trade releases.
Singapore's central bank will announce its rate decision, while Pakistan's central bank will reveal its policy rate.
On Friday, Japan will release data on industrial output, retail sales, jobless figures for June as well as Tokyo inflation for July.