Meetings of central banks will take up much of this week, with rate increases from both the Federal Reserve and the European Central Bank expected.

European Central Bank Meeting

All eyes are on the ECB's intentions for September as the markets are divided on whether there will be another rate rise or a pause. The ECB is largely anticipated to deliver another 25-basis point rate hike at its forthcoming meeting on Thursday.

Although it has decreased since December, when it peaked at 10.6%, inflation in the eurozone is still much higher than the ECB's 2% objective. Inflation was "projected to remain too high for too long," according to the ECB, and there was still "more ground to cover."

Investors and experts are disputing how many rate hikes are necessary and how long rates would need to stay high in order to bring inflation back near the target after eight straight increases since July 2022 totalling 400 basis points.

Federal Reserve Decision

Investors are concentrating their attention on whether this is likely to be the last rise in its tightening cycle as the Fed is almost certain to increase interest rates once more at the conclusion of its most recent policy setting meeting on Wednesday.

After raising its policy rate by 500 basis points since March 2022, when it began the quickest cycle of monetary policy tightening in more than 40 years in an effort to tackle spiralling inflation, the Fed suspended rate rises in June.

Regarding the central bank's perspective on longer-term monetary policy, investors have differing opinions.

While expecting this rise to be "the last" in the extended tightening cycle, Goldman Sachs analysts said Friday that they think the Fed will ultimately decide to "remain more hawkish than market pricing."

Stock Market

The Fed is anticipated to announce what may be the final rate rise of its most aggressive monetary policy tightening cycle in decades this week, putting a key test on a surge in U.S. equity markets.

Many investors anticipated that increased interest rates would trigger a recession at the beginning of the year, which would further harm equities following 2022's severe plunge. Rather, even as the Fed has made strides in its fight against inflation and investors are warming to the concept of a "soft landing," the U.S. economy is proving to be resilient.

Stock prices have recently increased on speculation that the Fed's cycle of tightening is coming to an end.

Investors will be concentrating on profits from some of the huge growth and tech firms, in addition to the Fed, that have driven markets higher this year. Microsoft and Alphabet are two of them; they report on Tuesday following the closing of the market.

Oil Prices

Oil prices increased by about 2% on Friday, marking a fourth straight weekly rise, as supply limitations in the coming months and mounting tensions between Russia and Ukraine that might further disrupt supplies were also factors.

According to Price Futures Group analyst Phil Flynn, "the oil market is starting to gradually price in a looming supply crunch."

"Global supplies are starting to become constrained, and this might intensify quickly in the upcoming weeks. Prices may be impacted by increased conflict risk, according to Flynn.

(Sources: investing.com, reuters.com)