Key takeaways:

• The US Federal Reserve is widely expected to lift the funds rate to 4.5%

• Battle lines are drawn as the gas industry lambasts the federal government price control policy

Australian shares are expected to open in the red to start the new trading week, as US inflation data and Federal Reserve policy headline this week action.

Economic Calendar and News

Look out for a series of central bank decisions this week, as monetary policy becomes a focal point. The Bank of England, the European Central Bank, and the US Federal Reserve will all convene this week to set interest rates.

The most important decision for financial markets is likely to come from the US Federal Reserve, which meets for the final time in 2022. Economists believe the Fed will make its first shift towards decreasing the pace at which it is lifting interest rates. The central bank is tipped to lift the benchmark rate by 50 basis points, having delivered four consecutive 75 basis point rate hikes. If that transpires, the target range for the federal funds rate will be 4.25% to 4.5%, a 15-year high.

However, investors may pay closer attention to the words of policy-makers. Observers believe the central bank could signal a higher peak rate than previously anticipated. The Fed is due to hand down updated economic projections, which may extend to slower economic growth.

Before the Federal Reserve maps out its next rate hike, consumer price index data will highlight what progress, if any, is being made in fighting inflation. The data may well shape the rhetoric used by the Federal Open Market Committee in its post-meeting statement. 

Headline CPI is expected to rise 0.3%, while core inflation could increase 0.4%. On an annual basis, the key watch-point will be whether CPI is greater than the 7.7% recorded in October, in which case the Federal Reserve may be concerned that inflation is not decreasing as it would like to see. 

Other data out of the US this week includes industrial production figures, manufacturing surveys, services and manufacturing activity, as well as retail sales.Locally, employment data enters the spotlight. Data for November is expected to show a resilient jobs market. Forecasts suggest up to 25,000 jobs may have been added to the Australian economy last month. Finally, RBA Governor Philip Lowe is scheduled to deliver a keynote address at the 2022 AusPayNet Annual Summit.

Stocks on watch

The federal government gas price controls are expected to remain a talking point in the week ahead. While the policy has been welcomed by gas buyers, and touted as a measure to potentially ease the pace at which utility bills increase, it has also attracted the ire of gas suppliers.The proposed law would give the government the power to regulate a reasonable price for gas. While a 12-month emergency price cap is the focus, fresh details of the policy suggest it could extend to an ongoing basis. The proposal has been likened to a near nationalisation of the gas market on the east coast. Producers would reportedly only be able to charge prices based on production cost and a reasonable' margin, overlooking risked capital invested in exploration.One independent analyst has described the policy as the single worst piece of energy policy across global energy markets in the last two decades, while Credit Suisse has compared the idea with the mining tax from a decade ago. Concerns stem from the fact that intervention in the market has the potential to discourage investment in exploration that would bring on new supply, raising the risks of longer-term gas shortfalls and blackouts.There are also some suggestions that a number of ASX players could be caught up in the move. The $18.4 billion takeover for Origin Energy (ASX: ORG) may now face greater hurdles, with its suitor entering an uncertain regulatory environment. Origin revenue could also take a hit to the tune of tens of millions of dollars. The likes of Beach Energy (ASX: BPT) and Cooper Energy (ASX: COE) also face potential hurdles associated with the proposal.Meanwhile, Exxon (NYSE: XOM), which supplies about one-fifth of gas along the east coast, has blasted the decision as reckless free market intervention. It has highlighted the significant risk of reduced gas production. It has already halved its forward planning for investment in the Gippsland Basin joint venture, indicating greater difficulty to commit funding to long-term projects, and a potential hint it may direct capital elsewhere.

Iron ore has remained buoyant over recent trading sessions, hitting a four-month high. The sector is likely to remain in focus over the coming days amid the unwinding of China COVID-zero policies, and ahead of a key government meeting this week. 

Some onlookers believe the Chinese government could announce support measures for the property sector, which would underpin demand for steel, and in turn, iron ore. Stocks likely to remain on watch include Champion Iron (ASX: CIA), Fortescue Metals Group (ASX: FMG), and Rio Tinto (ASX: RIO), among others.In breaking news, Westpac (ASX: WBC) has announced that it has ended takeover discussions with Tyro Payments (ASX: TYR). The bank completed due diligence on Tyro, but has come to the conclusion that submitting an offer is not in the best interests of Westpac shareholders at this time. Tyro also confirmed to the market that it has ended talks with various parties, including a consortium led by Potentia, which had submitted a revised offer of $1.60 per share.In the US, software firm Adobe (NASDAQ: ADBE) is due to report earnings after the market closes on Thursday, US-time. The company recent pricing updates will be in focus, with analysts tipping revenue growth. However, the uncertain macroeconomic outlook could also prove a headwind, so the pivotal matter will be whether management reaffirms Adobe FY23 guidance. Investors may also be treated to an update on the company proposed US$20 billion acquisition of Figma.US healthcare stocks could attract attention this week. Global biotech Pfizer (NYSE: PFE) will host its Near-Term Launches + High-Value Pipeline Day' event, with management set to provide updates on the company drug programs that could contribute to its growth. Companies like Merck (NYSE: MRK) and Bristol-Myers Squibb (NYSE: BMY) will present drug data at the ASH Conference, while Zar Lab (NASDAQ: ZLAB) and Cytokinetics (NASDAQ: CYTK) are expected to receive FDA updates.