Central bank meetings to shape markets as oil adds inflation pressure

Over the past three months, the key factor affecting the investment world has been the war between the United States and Iran.

Its impact has included a surge in oil prices, feeding concerns over inflation and raising fears that major central banks around the world could tighten monetary policy further, with a possible increase in interest rates to deal with inflation.

TISCO Asset Management Co., Ltd. said June would see meetings of three major central banks: the Federal Reserve (Fed), the European Central Bank (ECB) and the Bank of Japan (BoJ).

The key question for investors is what factors they need to follow closely at these important meetings.

Federal Reserve (Fed)

For the United States, the Federal Reserve (Fed) meeting in June is seen as one of the meetings markets have focused on most closely in several years.

Although most of the market expects the Fed to keep interest rates unchanged, the importance of the meeting does not lie in whether rates are raised or cut, but in the views and tone of the new Fed chairman, as well as the release of quarterly economic projections and the Fed dot plot, a key tool that reflects Fed policymakers’ views on the future path of interest rates.

The context of this meeting has changed because it is Kevin Warsh’s first Fed meeting as the new chairman.

Warsh took office as Fed chairman in May 2026 after being appointed by President Donald Trump and confirmed by the Senate.

A notable point about Warsh is that he is not a newcomer: he previously served as a Fed governor during the 2008 global financial crisis, giving him a relatively strong understanding of both monetary policy and financial market behaviour.

In terms of his thinking, Warsh is not clearly on either side.

He has previously taken a firm stance on inflation and criticised the Fed’s large-scale easing policies, but has become more flexible in recent years.

He does not believe policy guidance should be too fixed in advance, because he sees the economy as changing quickly and difficult to forecast.

Another challenge for Warsh is that the previous Fed chair, Jerome Powell, has stepped down as Fed chair but remains at the meeting as a governor.

This is the first time in 78 years that a Fed chair has left the post but continued as a Fed governor.

Warsh’s statement and the dot plot, which reflects all Fed policymakers’ views on the direction of interest rates, are therefore key issues for investors to watch.

European Central Bank (ECB)

In Europe, the European Central Bank (ECB) meeting in June is expected to take a clearly more restrictive monetary policy stance.

The market expects the ECB to raise interest rates again, even though the European economy is still recovering and faces considerable growth pressure, making Europe’s picture rather different from other regions.

The main factor behind the prospect of a rate increase is inflation, which has accelerated again, especially because energy prices remain high.

This means the ECB is not only concerned about short-term inflation but is also starting to look at the risk that inflation could spread more widely and become embedded in the economy.

If consumers and businesses believe inflation will not come down, this could lead to continued increases in wages and product prices, creating a cycle that is difficult to control.

For this reason, this round of rate increases is seen as a pre-emptive move to keep inflation within the target range and maintain long-term confidence, even if it comes at the cost of short-term pressure on the economy.

This shows that, at this stage, the ECB is putting inflation control first.

The rate increase may not be much of a surprise, but what investors need to watch is the signal about the future: whether the ECB will raise rates and then reassess the situation, or indicate that it must continue raising rates if energy prices do not ease.

Bank of Japan (BoJ)

The Bank of Japan (BoJ) meeting in June is seen as another important step towards a return to tighter policy.

The market expects there could be an interest rate increase.

If this happens, it would show that the BoJ is more confident that the domestic economy has begun to recover and that public purchasing power has strengthened.

A policy adjustment would also help reduce pressure on the yen and lower the direct impact on inflation and import costs.

The market sees a likelihood that the BoJ will raise interest rates by another 0.25 percentage points at this meeting, to 1.00%.

The main factor is the clearly improving economy, especially the strong first-quarter 2026 GDP, together with the view of board members that current interest rates remain too low relative to inflation.

Investors also need to watch the government’s continuing economic stimulus policies.

Most recently, the Japanese government has planned stimulus measures using a special budget of about US$19 billion to reduce the impact of higher oil prices on the public.

The measures could affect the BoJ’s policy stance in the future.

June is the period when major listed companies around the world have already finished reporting first-quarter results.

The positive factor from those earnings is therefore likely to have run its course.

The meetings of the Fed, ECB and BoJ will certainly affect the investment world.

In particular, if any central bank signals a more hawkish stance than expected, it could put pressure on markets.

Conversely, if any central bank sends a dovish signal because the war situation has eased, it could also support markets.