The Week Ahead: 16-20 March 2026
These are the key macro events for the upcoming week.
US - We expect the FOMC to stay on hold this upcoming Wednesday. We already expected the Fed to remain on hold for an extended pause, and that will most likely be the message. Powell will likely provide a hawkish outlook on the back of the uncertainty and upward price pressure from the Iran war, despite the disappointing recent labour market report. The median dot for year-end will likely put in one more cut, same as December last year, although a significant portion of the hawkish dots are non-voters this year. In our view, the median voter dot is actually on two more cuts this year. In the projections, we expect a downward revision of growth, a significant increase in headline inflation, but also an increase in core PCE on the back of recent hot readings.
Eurozone / UK – The ECB is expected to keep rates on hold, but the March meeting promises to be the most interesting in a while with the ‘good place’ on interest rates challenged by the energy shock. The cut-off date for the projections was most likely just before the war, so the energy shock will only be very modestly included. However, the ECB will also likely present scenarios that better capture recent developments, which will indicate that they may need to act. In addition, we expect the general tone of the communication to be a lot more hawkish. Uncertainty on the conflict is high, but if the current situation persists through to the April meeting, a hike becomes a distinct possibility – though not our current base case. The BoE is also expected to keep rates on hold, with the focus similarly on how it views the impact of the Middle East conflict on the UK economy.
China: Activity data for January/February combined (Monday) are expected to confirm ongoing weakness in domestic demand. Retail sales will likely accelerate compared to a poor December reading, but growth will remain subdued. Industrial production growth will remain solid at around 5% y/y, while fixed investment is expected to slide deeper into annual contraction driven by an ongoing property slump. On Friday, we expect the 1-year loan prime rate to be kept on hold for now. Further modest (piecemeal) monetary easing steps to support domestic demand are still likely, but the path will partly depend on the inflationary impact of the Iran crisis.
Japan: On Thursday, we expect the Bank of Japan (BoJ) to keep the target rate at 0.75% for now, in line with consensus. Going forward, we expect the BoJ to continue with a very gradual hiking path. A (sustained) rise in energy prices leading to higher inflation may trigger an earlier rate hike, although governor Ueda will continue weighing inflation risks against growth risks.
