18.03.26 - Week of Central Bank announcements
This week is dominated by a dense schedule of central bank decisions, with markets closely watching both policy signals and forward guidance.
Tonight, the Federal Reserve (Fed) will announce its latest interest rate decision, followed by the press conference with Jerome Powell. Market consensus expects the Fed to remain on hold. However, the focus will be less on the decision itself and far more on Powell’s tone, forward guidance, and any signals regarding the balance between inflation risks and slowing economic momentum.
Earlier today, the latest US Producer Price Index (PPI) added an important piece to the puzzle. Producer prices rose by 0.7% month-over-month in February 2026, accelerating from 0.5% in January and significantly above expectations of 0.3%. This marks the strongest increase in seven months and reinforces the view that inflationary pressures are re-emerging rather than fading.
Yesterday, the Reserve Bank of Australia (RBA) raised interest rates by 25 basis points to 4.1%, in line with expectations, signaling continued vigilance on inflation.
Today, the Bank of Canada (BoC) held its policy rate unchanged at 2.25%, also as expected.
Tomorrow will be particularly important, with four major central banks announcing their decisions: the Bank of Japan (BoJ), the Swiss National Bank (SNB), the Bank of England (BoE), and the European Central Bank (ECB). All are currently expected to keep rates unchanged.
Markets: driven by headlines from Middle East - optmistic investors
Equities: fell in the red zone during afternoon session
Bonds: no major moves, only with a slight uptick - US 10-year Treasury yield 4.23%
Currencies: USD gaining more ground, the Swiss franc weakens with intervention by the SNB
Commodities: oil climbs - WTI crude oil at USD 98/barrel and Brent at USD 108/barrel, while precious metals fall with stronger USD
Cryptos: losing ground - Bitcoin down to USD 71k after reaching 76k
Volatility: The VIX only a bit higher towards 24
My View: We continue to see a dangerous and even growing divergence between market expectations and macro reality, guess driven by liquidity available almost endlessly.
Some investors are already positioning for rate cuts, driven by rising recession fears linked to higher oil prices. However, this view ignores a critical constraint: Rising inflation, led by the oil shock, limits central banks’ ability to cut rates. Current data and news point toward a stagflationary setup: higher inflation, slowing growth, limited policy flexibility.
At the same time, markets continue to price: a quick end to the Middle East conflict and contained impact from higher energy prices.
Both assumptions appear overly optimistic. First signs of energy stress are already emerging in several countries, and the longer the disruption persists, the more visible the macro impact will become.
In this environment, chasing short-term upside based on hopes of quick resolution or supportive central bank action carries significant risk. There is currently no compelling reason to increase speculative exposure to equities at these levels. On the contrary, the risk-reward profile suggests a more cautious approach.
Position for lower equity levels rather than chasing upside driven by hope.
Become a member to access more valuable market updates like this
