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ECB set for hawkish pivot

The ECB’s 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

The Week Ahead: 16-20 March 2026

These are the key macro events for the upcoming week.

Podcast - Talking Macro: Is Europe heading for a new energy crisis?

In this episode, Bill speaks with Senior Energy Economist Moutaz Altaghlibi about how the Iran conflict is affecting global energy markets, and whether Europe faces the risk of a new energy crisis.

Macro scenarios of the Iran conflict

The conflict in between the US-Israel and Iran has entered its 11th day. Geopolitical risk, as measured by the GPR index, has spiked to levels last seen around the Iraq invasion in 2003, and has remained highly elevated since. Since our initial publication last week Monday, it has been a rollercoaster ride for both oil and gas markets [1]. Given the ongoing uncertainty around the duration and impact of the conflict, we have put together three scenarios exploring how the macro-economic impact could evolve over the coming months, focused on the US and eurozone, and with the implications for the ECB and Fed’s key policy rates. We will follow up this note with updates on how we see these scenarios impacting bond and FX markets in the coming days.

The Week Ahead: 9-13 March 2026

These are the key macro events for the upcoming week.

What a prolonged LNG supply shock could mean for gas prices and inflation

First signs of Germany’s fiscal spending spree

Defence spending is surging, according to monthly government spending data. The spending jump is now visible in factory order data, with the recent strength driven primarily by weapons and aircraft orders. Defence spending is likely to provide a cyclical tailwind to industry. But it will not be a saviour by itself given structural headwinds. A key uncertainty remains how quickly spare capacity in German industry can retool to new sources of demand.

Implications of Middle East escalation

The military escalation in the Middle East threatens the economy because of the disruption to energy supplies and increased uncertainty. Energy infrastructure has not yet been significantly impacted, but that remains a risk as air strikes continue to rage. Shipping through the Strait of Hormuz - one of the world's most important energy choke points - has come to a near stand-still. Any sustained energy price shock would have more noticeable effects on inflation than growth. We present inflation scenarios assuming oil at USD 80 per barrel, 100 and 130; in all cases inflation spikes in 2026 but falls back in 2027 . For monetary policy, the duration of the shock is crucial, as are second round effects, given the focus on the medium term.

The Week Ahead: 2-6 March 2026

These are the key macro events for the upcoming week.

Eurozone - Early signs of the German spending push

Q4 GDP surprised to the upside, driven partly by the usual suspects (Spain), but Germany was a notable contributor after years of tepid growth, while France was resilient in the face of budget uncertainty. We are seeing early signs of Germany’s spending push, particularly in defence-related factory orders. The strengthening domestic economy adds to our conviction of an on-hold ECB. Beyond near-term policy, the changing of the guard on the Governing Council will be key over the coming 1-2 years.