Economist Bheki Mahlobo expects interest rates to rise in the United States (US) and Japan this week as central banks continue to contend with inflationary pressure.

The US Federal Reserve meets on Tuesday and Wednesday, with Mahlobo expecting a 25-basis-point increase that would take its target range to 3.75% to 4.00%.

US inflation stood at 3.4% in August, remaining above the Federal Reserve’s 2.0% target, while unemployment was 4.1%. Mahlobo said another 25-basis point increase before the end of the year remains possible, depending partly on geopolitical developments and their effect on inflation.

The Bank of England announces its decision on Thursday. Mahlobo expects it to leave rates unchanged at 3.75%. British inflation rose from 2.6% in June to 2.9% in July, but unemployment stood at 4.9%. The bank expects unemployment to rise to 5.1% by the fourth quarter and Mahlobo thinks this may cause the bank to sit on its hands.

Japan is expected to move in the opposite direction on Friday, with Mahlobo forecasting a 25-basis-point increase to 1.25%. Headline inflation slowed to 1.9% in July, but the Bank of Japan expects inflation to average 2.5% over the financial year to March 2027 as higher oil prices and a weaker yen lift import costs.

In South Africa, Mahlobo expects the Reserve Bank to raise the policy rate by 25 basis points from 7.00% to 7.25% when it meets next week. A further 25 basis point increase before the end of 2026 also remains possible.