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Crude oil prices rose Tuesday morning, testing investors’ nerves over the impact of inflation as a host of central banks prepare to announce their latest interest rate measures.
Brent crude, the international benchmark, extended gains in a fourth straight trading session, rising 0.7 percent to $95.13 a barrel, while West Texas Intermediate, the US equivalent, added 1.4 percent to $92.76. Both benchmarks hit their highest prices in 10 months earlier today.
Those gains were boosted by the announcement earlier this month that two of the world’s biggest producers, Saudi Arabia and Russia, would extend their supply cuts until the end of the year.
Traders feared that rising oil prices could hamper central banks’ efforts to control inflation in the United States and Europe, strengthening banks’ arguments for keeping interest rates higher for longer. , despite indications suggesting a slowdown in global economic growth. The United States, the United Kingdom, Switzerland and Japan are among the countries whose central banks are meeting this week to set their monetary policy.
The European regional Stoxx Europe 600 index fell 0.2 percent, led by losses in healthcare stocks, while France’s Cac 40 fell 0.3 percent and the Dax German dropped 0.4 percent.
China’s benchmark CSI 300 index fell 0.2 percent while Hong Kong’s Hang Seng gained 0.3 percent. Japan’s Topix rose 0.1 percent as markets reopened after a holiday.
The US Federal Reserve is set to announce its latest policy decision on Wednesday, and the overwhelming majority of the market is betting that it will keep rates steady within the current target range of between 5.25 percent and 5.5 percent.
However, traders are less confident that continued price pressures will push U.S. policymakers to raise rates once more by the end of this year and delay their plans to cut rates into 2024.
The latest U.S. consumer price data reinforced fears that the Fed’s latest attempt to bring inflation back to its 2 percent target could take longer than expected. Rising energy costs pushed the headline figure above forecast, to 3.7 percent in August.
“The game, at the moment, is not about any real changes on Wednesday. This is what is suggested in the statement,” said Mike Zigmont, head of trading and research at Harvest Volatility Management. “I’m sticking to the narrative that we’ll be waiting until the Fed tells us something.”
Contracts tracking the tech-focused Nasdaq Composite Index fell 0.1% before the New York open, while those tracking Wall Street’s benchmark S&P 500 were flat.
The Bank of England will follow the Fed with its own policy meeting on Thursday and is expected to raise its benchmark bank interest rate by a quarter of a percentage point, to 5.5 percent. The Bank of Japan is expected to keep rates at their current level of minus 0.1 percent on Friday.