Australia’s central bank has delivered its first interest-rate increase since late 2023, citing a worsening inflation outlook and a broad upswing in the economy over recent quarters. Economists think the move could be the start of a concerted tightening cycle as inflation proves to be hard to stamp out. The tough part of monetary policy is anticipating where inflation will go and adjusting rates accordingly—a challenge that will soon fall to President Trump's Federal Reserve chair nominee, Kevin Warsh. If confirmed, Warsh will inherit a central bank divided over whether to cut interest rates further. Wall Street appears comfortable that Warsh will continue the Fed's tradition of independence, despite pressure from Trump to lower rates, thanks in part to his ties with Stanley Druckenmiller. However, gauging the true state of the U.S. economy is about to get harder: the January jobs report won’t be released as scheduled Friday because of a partial government shutdown.

The Reserve Bank of Australia raised the official cash rate by 25 basis points to 3.85% on Tuesday, taking back the cut delivered as recently as August—a sudden reversal that came after its inflation forecasts missed the mark.

“A wide range of data over recent months have confirmed that inflationary pressures picked up materially in the second half of 2025,” the RBA’s monetary policy board said in a statement.

Warsh is a longtime inflation “hawk” who once backed a tight money policy but lately has struck a more dovish tone. Investors are hopeful that he will channel the approach of Druckenmiller, who is relentless in trusting data, rather than preconceived beliefs.

8:55 a.m.: Johnson Redbook retail sales index
10 a.m.: Job openings and labor turnover survey
7:30 p.m.: Japan services PMI

8:15 a.m.: ADP National Employment Report 
9:45 a.m.: US Services PMI
10 a.m.: ISM Report On Business Services PMI
11 a.m.: Global Services PMI
12 p.m.: Federal Reserve Bank of Richmond President Thomas Barkin speaks at Rotary Economic Symposium
6:30 p.m.: Federal Reserve Governor Lisa Cook speaks at Economic Club of Miami event

A solid majority of Bank of England monetary policy committee members are expected to vote in favor of keeping interest rates on hold at Thursday's interest rate decision, Tickmill Group's Patrick Munnelly says in a note. He expects the vote split to be seven members favoring keeping rates on hold at 3.75% versus two members favoring cutting interest rates by 25 basis points. Markets price a 97% chance of the BOE keeping interest rates on hold this week, LSEG data show. —Miriam Mukuru

Geopolitical risk is "the market's overwhelming top concern," Bank of America analysts write. BofA's 1Q Credit Investors Survey finds that concerns around international tensions rose to nearly 70% in January from around 45% in October "amid developments in Venezuela, Greenland and Iran." The analysts say worries about asset bubbles remain elevated at around 47%. They add that fiscal policy concerns have risen "meaningfully" to 46% "following renewed scrutiny of Fed independence." The analysts add the recent announcement of Kevin Warsh as Fed chair should ease some of those concerns. — Paulo Trevisani

• The U.S. has agreed to reduce tariffs to 18% on India, which in turn will stop buying Russian oil, President Trump said Monday, in a deal aimed at easing trade tensions between the two countries.
• The Trump administration is developing a roughly $12 billion stockpile of critical minerals aimed at helping U.S. manufacturers navigate future supply shortages and overcome future reliance on China for rare earths and metals.
• For Taiwan, as with other U.S. security partners in Asia, giving up on America isn’t an option.
• Argentina’s libertarian leader Javier Milei has won over President Trump and wooed global investors. Now he must convince crisis-weary Argentines to stop hoarding their U.S. dollars.
• French inflation fell more sharply than expected last month, raising further possibility that eurozone inflation could be below the European Central Bank’s target for longer this year.
• South Korea’s headline inflation eased to a five-month low in January, largely due to stable fuel costs, in line with the central bank’s annual target.
• Gold and silver staged a rebound after two sessions of heavy selling that rippled across commodity markets, as underlying drivers of demand remain strong and current price levels draw renewed interest.

WSJ Pro Central Banking brings you central banking news, analysis and insights from WSJ’s global team of reporters and editors. This newsletter was compiled by markets reporter Vicky Ge Huang in New York. Send your tips, suggestions and feedback to vicky.huang@wsj.com.