Noreen Burke

Investing.com — The Federal Reserve (the Bank of England) and the European Central Bank will meet in the week ahead to conclude the year. This is against the backdrop of Omicron woes, spiking inflation, and a large number of central banks across the globe. U.S. stocks are back at record highs, but there is still the potential for renewed volatility after last week’s selloff. The Fed is moving closer to increasing rates and economic data will remain in focus, including reports about producer prices as well as retail sales. Here’s what you need to know to start your week.

1. Fed will discuss tapering faster

Fed Chair Jerome Powell will host its last meeting for the year Tuesday and Wednesday. He and his colleagues will discuss how to accelerate the closing down of central bank’s pandemic-era, $120billion per month asset buying program.

On November 1, the Fed began to taper its stimulus program. This would have set it up for completion by the middle of 2022. Analysts believe that if Fed speeds up the taper, it could be completed by March and allow for two rate increases in 2022.

Investors should also monitor any indications that the Fed becomes more worried about inflation. Powell stated that this cannot be called “transitory”. The data on Friday revealed that consumer prices increased at the fastest pace in nearly four decades last month. This underlines expectations of higher rates.

2. BoE, ECB decisions

Within 45 minutes, the and the will each announce the final monetary policies of the year. Both are likely to move the market.

Due to insecurity over Omicron Covid-19, the BoE expects that it will hold off on raising rates until February.

and data will provide UK policymakers with a final insight into the strength of the economy ahead of Thursday’s meeting, with inflation forecast to reach its highest level in a decade.

The ECB is expected to announce that its €1.85 trillion PEPP pandemic stimulus scheme will end in March, but the fourth wave of the pandemic and the new Omicron variant have clouded the outlook for the euro zone economy.

3. U.S. Economic Data

On Tuesday, the U.S. will release data. This event is the main highlight on the economic calendar.

High inflation can be attributed to supply chain bottlenecks, which show little signs of improvement. Companies also raise wages in competition for workers.

According to Labor Department data, consumer prices rose year over year in November. This was the highest level in 39 years.

Meanwhile, data for Wednesday is due and Thursday’s figures are on the way.

4. Market volatility

U.S. Equities have risen to record levels following an initial selloff due to concerns regarding the Omicron variant, and the possibility of faster tapering.

Markets could still be rattled by signs that the Fed becomes more concerned about inflation. A more aggressive rate-hiking path could be seen in the “dot chart” projection. This could lead to renewed volatility.

Investors are also eager to hear the Fed’s view on the Omicron variant’s potential impact on economic growth or inflation.

Mona Mahajan is a senior investment strategist for Edward Jones and said to Reuters that the Fed meeting may bring investors more clarity after recent volatility.

“It feels like the market has climbed two walls of worry already: Omicron and the path of the Fed,” she said. “I do think over the next couple of weeks we will get a little bit more certainty on both fronts.”

5. Bank of Japan

On Friday, the BoJ will conclude its two-day policy meeting. It appears to be set to keep its ultra-loose monetary policy but may debate whether it should extend its pandemic relief program past its current end date of March 2022.

Turkey’s central bank on Thursday to decide whether to cut interest rates as demanded by President Recep Tayyip Erdogan, in the face of higher inflation (currently running at more than 21%) and a weaker .

The central banks of, are meeting throughout the week. Rate hikes by the two latter institutions could be on the cards.

–This report was contributed by Reuters