Time to be forceful? World market themes for the week ahead

Britain and Australia may opt for 50 basis-point rate hikes in coming days, given the high risk that markets will punish any central bank that hesitates to crack down on multi-decade high inflation.

European gas prices are up almost 200% so far this year and the longer this shock continues, the worse economies will fare. JPMorgan and HSBC are among those predicting a 50 bps move. While only three BoE policymakers favoured 50 bps at the last two meetings, data since then has shown inflation reaching 9.4%, a 40-year high. It could hit 12% by October - six times the BoE target.

Given the Fed now favours a data-dependent approach over explicitly guiding markets on policy, the jobs figures and other numbers due over the next eight weeks until the next Fed meeting, carry added importance. Latest data showed consumer prices climbing at a 6.1% annual pace, more than double the 2-3% target, and double the pace of wage growth. And Treasurer Jim Chalmers warns it will get worse before it gets better.

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