Fed, BOE and BOJ set to hold rates in pivotal week

Three of the world's most powerful central banks will deliver rate decisions within 72 hours of each other next week, as oil prices hover near $100 a barrel and inflation remains stubbornly above targets on both sides of the Atlantic and Pacific.

The Federal Reserve announces its decision on Wednesday, July 29, followed by the Bank of England on Thursday, July 30, and the Bank of Japan concluding its two-day meeting on Friday, July 31. Together, the trio governs monetary policy for the bulk of the G7 economy.

The Fed Holds, but Hawks Circle

The Fed is widely expected to keep its benchmark rate at 3.5% to 3.75% for a fifth consecutive meeting. But the meeting comes amid rising tension within the Federal Open Market Committee. Minutes from Chair Kevin Warsh's inaugural June meeting revealed that a few officials could have supported raising rates immediately, and the committee split evenly — nine members projecting at least one hike this year and nine expecting rates to hold or fall.cbsnews+3

June's consumer price index eased to 3.5% year-over-year, the first decline in five months, driven by a sharp drop in energy costs during that month. Yet Warsh has signaled he will not tolerate inflation lingering above the Fed's 2% target, telling audiences in early July that "prices are too high". The CME FedWatch Tool ↗ 0.39% showed market-implied odds of a hike at the July meeting climbing to 38%, up from 12% a week earlier, according to CBS News.chase+4

Bank of England: Steady at 3.75%

The Bank of England's Monetary Policy Committee is expected to hold its key rate at 3.75%, where it has sat since the last cut in late 2025. Prediction markets assign a 97% probability of no change. However, futures markets have begun pricing in the possibility of rate increases in the autumn as escalating hostilities between the United States and Iran push energy costs higher, according to Morningstar.polymarket+3

BOJ Signals Patience Despite Lingering Risks

The Bank of Japan raised its policy rate to 1% in June — its highest since 1995 — and is expected to stand pat next week while revising up its growth forecast. Reuters reported Thursday that the BOJ will maintain its warning that inflation could overshoot 2% but signal that the risk of a worst-case scenario has diminished. Traders see roughly a 69% chance the BOJ hikes again by October, according to overnight swap pricing cited by Bloomberg.reuters+1

Oil Prices Loom Over All Three

Binding the decisions together is the surge in oil prices. Brent crude touched $102 a barrel on Thursday before pulling back to around $97, its highest level since May, as the widening U.S.-Iran conflict disrupted Middle East energy routes, the New York Times reported. RBC Capital Markets warned that a "full regional war" could push prices to $150. The national average for a gallon of gasoline stood at $4.09, up 37% from pre-war levels.nytimes+1

Gregory Daco, chief economist at EY-Parthenon, summarized the dilemma facing policymakers: "While a July rate hike remains highly unlikely, the September FOMC meeting could become the first meaningful test of whether the recent improvement in inflation proves durable".cbsnews