Week Ahead: Central Bank Meetings Amid Conflict

It’s a packed week full of major central bank meetings – bang on time it would seem – as markets continue to grapple with the Middle East conflict and its impact on the global economy. Understanding how long the conflict and supply shocks will last remains the priority for traders and investors. Mixed messages from the White House and the unknown leadership situation in Iran mean policymakers will likely play for time, with forward guidance that says the next steps will depend on the evolution of energy prices and the impact on inflation expectations.

If crude oil prices retrace quickly, then there’s a chance rate setters continue where they left off pre-war. That means rates cuts for the Fed and BoE have been paused in the near term but not written off completely, while a current ECB hike is priced out. Such a scenario would point to headline inflation staying below 3% in most regions, with officials minded to “look through” these energy price spikes. If the disruption lasts longer, risking more prolonged higher inflation, then officials will be more cautious. That probably means central bankers that are patient with policy action possibly in early summer.

At present, bond markets have shifted sharply in recent days and now lean towards hikes. The Fed is in a relatively good position to wait and see how the war in the Middle East plays out and is not in a hurry to provide strong forward guidance about its next policy changes. The ECB may signal readiness to act to upward price pressures but at the same time acknowledge heightened uncertainty that is too early to draw firm conclusions. The Bank of England is set to pause its cutting cycle as the energy shock blurs the UK’s disinflationary path. Japan is the outlier being on a hiking cycle. Real wage growth turning positive for the first time in over a year in January supports tightening further, though surging energy prices is threatening to undermine the recent purchasing power recovery.

Again, we highlight President Trump’s off-ramp, with a China summit still set for the end of this month, and the midterm elections towards the end of the year. Senior US and Chinese officials will meet in Paris on Sunday, to lay the groundwork for the summit. Our broad playbook remain that China is key in this conflict with gulf oil supplies hugely important for Beijing. More broadly, higher energy costs are inflationary, but they can ultimately be demand destructive, which will push core inflation pressures lower over the medium to longer term.

In Brief: Major Data Releases of the Week

Tuesday, 17 March 2026

RBA Meeting: Money markets see a 65% chance of a 25bps rate hike, that would take the cash rate to 4.1%. Recent inflation, growth and labour market data has been strong, while RBA comments have also signalled a possible move. That said, current global uncertainty gives officials a chance to assess inflationary pressures. AUD broke to the upside last week to a near 4-year high, but that was also near a long-term top from January 2023 at 0.7203 so resistance.

Wednesday, 18 March 2026

Bank of Canada Meeting: Rates will be kept on hold at 2.25%. Friday’s headline jobs figure showed the biggest monthly drop since January 2022, while inflation cooled in January. Money markets predict the first rate hike will be in October. CAD has been relatively strong versus its peers, but not the greenback. A possible triple bottom has formed in the major with an upside target around above 1.39.

FOMC Meeting: The Fed will sit on its hands leaving rates at 3.5-3.75%. After cutting rates 75bp over the final three policy meetings of 2025, the January meeting saw officials adopt a slightly more hawkish stance by removing comments around downside risks to employment. But the recent NFP print was negative, and the war-driven energy price surge will likely see stagflation enter the conversation. We get updated dot plots, and this is Chair Powell’s penultimate FOMC meeting. The dollar index is near an important top from November at 100.39.

Thursday, 19 March 2026

Australia Jobs: Employment is forecast to rise by around 20k signalling jobs growth moving past its trough after late-2025 volatility. The unemployment rate is predicted to hold at 4.1%, though recent declines have largely reflected lower participation rather than materially stronger hiring.

UK Jobs: The January jobless rate is seen steady at 5.2% with unchanged to slightly cooler wage growth. The data will be overshadowed by the ongoing Middle East situation and associated energy upside. However, a soft or in-line report would keep the bias for at least one 2026 cut alive.

Bank of Japan Meeting: Consensus expects rates to be kept steady at 0.75%. The focus will be on commentary around the spring wage negotiations and Iran conflict hit to inflation expectations. JPY moves are probably more about global risk sentiment and US yields near term, rather than fresh BoJ surprises. For rate setters, the bigger story is whether incoming wage deals and inflation stick high enough to justify one or two more small hikes later this year.

ECB Meeting: The deposit rate will remain at 2% but hints around upside risks to inflation due to higher energy costs will be the focus. February’s outdated inflation data was already hotter than expected. Will Lagarde shift the current ‘good place’ policy into something more hawkish? If she sounds more balanced, stressing weak growth and data‑dependence, the “one‑and‑done” hike pricing for this year could fade. EUR/USD closed near its weekly lows and through a swing low from November at 1.1468. Next major support sits at August 2025 lows at 1.1391

Bank of England Meeting: Markets fully expect the MPC to maintain rates at 3.75%. With high energy prices erasing any hopes of a cut at this meeting, officials will probably keep their options open, with a 7-2 split likely. GBP and Gilts will move most on how clearly the statement flag the first cut window. Cable fell to 3.5-month lows on Friday with next support below 1.32.

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