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The price of oil futures climbed higher at the end of the week due to the ongoing tensions in the Middle East. A barrel of Brent oil touched the ninety-dollar mark, and the American WTI oil then crossed the mark of $85 per barrel.*

Stock markets, not only in the US, are going through a difficult period. The main index of the New York Stock Exchange, the S&P 500, has written off over three per cent in the past week, and other Wall Street indices have also entered negative territory. Investors are not persuaded to make major purchases even by the solid results of companies for the third quarter. They are counteracted by statements by US central bank officials, who suggest that the likelihood of further interest rate rises is growing.

Although inflation in the United States has fallen significantly, it still remains above the US central bank's target. Its governor, Jerome Powell, assured almost two months ago that the Fed is ready to raise interest rates if necessary, although it has paused further tightening of monetary policy for now. But now there was a surprise when September inflation did not fall and is higher than both the Fed and the markets expected.
What might this mean for future developments?

The labor market in the United States remains tight and unemployment remains at record lows. This could prompt the Federal Reserve to consider raising interest rates further, even though it decided to keep them at their current level at its last monetary policy meeting. If there is another "hike", this would not be good news for stock markets. Particularly if US economic developments necessitate a continuation of interest rate hikes over the next year.

The US Federal Reserve's benchmark interest rates are its highest since 2006. European Central Bank rates are even the highest in its history. Will European and US monetary policy continue to tighten in the upcoming months, or are we at the peak of the interest rate cycle? What could be impact the situation? Data on inflation and economic activity in both the US and the euro area might provide the answer.