What investors need to know as US Fed, Bank of Japan, Bank of England set policy this week

The US stocks continued to remain under pressure on Tuesday as crude oil prices remained elevated, creating inflationary pressures across the globe. Consequently, stocks continued to remain under pressure across Asia, Europe, and the US, with headline benchmark indices plunging by over 2% in the previous week.

Cost pressures and an inflationary environment persisted across the world as crude oil prices bounced back by nearly 55% from the July lows. The sticky inflation and surging yields are pricing in for a end of cheap money policy across the board. The global inflationary scenario now prompts central bankers to take corrective action to adapt to the evolving scenario.

Rate hike on cards for three key central banks

The current week is set to tone monetary policy stance for half of the globe as three largest central banks are set to declare their policy decisions this week. The US Federal Reserve, Bank of England and Bank of Japan will announce their monetary policy decisions this week.

Hawkish commentary all over

Besides key expectations on the rate hike, the commentary is expected to remain common across the three policy decisions. The hawkish commentary by the central bankers is likely to influence policy decisions for upcoming central bank policy meetings. Elevated tensions in the Middle East have pressurised economic stability. Rising bond yields are likely to impact credit growth in the developing markets due to high debt servicing costs, further impacting economic growth.

What it means for global equity markets?

Expected rate hikes and a sticky crisis in the Middle East are expected to weigh on equity market sentiment across the board. All the benchmark equity indices for major economies like the US, Japan, China, the UK, and India are trading in the red this week, falling as much as 4%.