The U.S. Federal Reserve is expected to announce its first interest rate hike since 2018 on Wednesday as officials try to balance the twin threats of inflation hitting a 4-decade high and economic uncertainty caused by military action in Ukraine. The Bank of England is expected to raise rates again this week while the central banks of Japan, Turkey and Brazil hold monetary policy meetings. The massive rally in commodities looks set to continue while the stock market continues to struggle. Here’s what you need to know at the start of the week.

1. Fed rate hike

The Federal Reserve made it clear that it intends to raise interest rates by a quarter point on Wednesday after the conclusion of its two-day meeting to combat rising inflation, which stands at 7.9%, well above the Fed’s 2% target.

A wider rate hike of another half a percentage point is not expected as Russia’s military action in Ukraine has sent commodity prices soaring and caused major uncertainty in the financial market.

The massive rally in commodities has increased pressure on global central banks to tighten monetary policy and contain inflation. But it has raised fears that higher interest rates will stifle economic growth at a time when rising prices are already weighing on consumers.

The Fed will release its updated “dot plot” that tracks interest rate forecasts, and investors are hoping to see how the military operation affects the outlook for monetary policy. Investors will also be watching for any indication of the central bank’s plans for its nearly $9 trillion balance sheet.

2- Bank of England

The Bank of England is expected to raise rates on Thursday for the third time since December after its meeting, but officials favor another quarter percentage point hike rather than a higher half-point increase.

Bank of England Governor Andrew Bailey is likely to signal that a further rate hike is coming as officials seek to mitigate the risk of high inflation taking hold.

U.K. consumer price inflation hit a near 30-year high of 5.5% in January due to rising energy prices and supply chain disruptions.

As with the Fed, investors will be watching the bank’s assessment of how the special operation in Ukraine affects the interest rate outlook.

В преддверии заседания Банка Англии в среду Великобритания опубликует свой последний отчет по занятости, в котором составляющая зарплаты, вероятно, будет в центре внимания по мере роста стоимости жизни.

3. Commodity rally

The recent massive increase in commodity prices has the potential to continue for an extended period, and the rapid end of hostilities in Ukraine is questionable.

Russia’s special operation in Ukraine and the ensuing sanctions on Russia have pushed oil prices to 14-year highs and natural gas prices near record highs. Wheat and copper prices are near all-time highs, and a doubling of the price of nickel last week forced the London Metal Exchange to suspend trading in the commodity.

U.S. government officials have urged domestic and global producers to increase oil production to offset the supply shock, and there is talk of potentially increasing supplies from Iran, Venezuela and the United Arab Emirates.

Market watchers will focus on reports from the International Energy Administration and the Organization of the Petroleum Exporting Countries this week.

4. The stock market is struggling for survival

Last week, the benchmark S&P 500 Index posted its second consecutive weekly decline, while the Dow Index fell for the fifth straight week due to uncertainty over the conflict in Ukraine and attention on the upcoming Federal Reserve meeting.

The stock market has struggled this year as concerns over the Russia-Ukraine crisis have exacerbated a sell-off initially sparked by fears of rising bond yields as the Fed looks to tighten its monetary policy. The S&P 500 is down 11.8% in 2022 so far this year.

“While investors have come to terms with the fact that the Fed is likely to start raising rates this week, there is still a lack of clarity on how far and how fast the Fed will move next,” Lindsey Bell, Ally’s chief market and money strategist, wrote in a note quoted by Reuters on Friday.

“With the market taking action (in the form of volatility) and possibly reducing demand, the Fed won’t have to act as quickly. Nevertheless, the pace of inflation will be a key driver of its policy changes for much of this year.”

5. Central banks

The blue-chip Bank of Japan is not expected to announce any changes to its monetary policy when its two-day meeting ends on Friday, as the country’s inflation is still lagging far behind the rest of the world.

In emerging markets, Turkey’s central bank is expected to keep its weekly repo rate unchanged at 14% on Thursday despite inflation hitting a 2-decade high of 54% in February. President Tayyip Erdogan’s unconventional approach to monetary policy calls for softer rather than tighter monetary policy to combat inflation.

Brazil’s central bank will also meet Thursday and is expected to raise the rate to 11.75%, the ninth consecutive rate hike amid annual inflation of 10%.

Russia’s central bank will meet on Friday after doubling its interest rate to a record high of 20% following the start of special operations in Ukraine in an attempt to offset the impact of harsh international sanctions. The Russian stock market will be closed again this week.