Market news & insights

Three central banks are deciding rates simultaneously, Brent crude is swinging wildly around US$100 a barrel, and a war in the Middle East is rewriting the inflation outlook in real time. Whatever happens this week could set the tone for markets for the rest of 2026.

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Quick facts

• The Reserve Bank of Australia (RBA) announces its next cash rate decision on Tuesday, with markets now pricing a 66% chance of a second hike to 4.1%.
• Some analysts have warned the Iran war could push US inflation to 3.5% by year-end and delay Fed rate cuts until September, making this week's FOMC dot plot the most closely watched in years.
• Brent crude is flirting with US$100 a barrel after Iran launched what state media described as its "most intense operation since the beginning of the war."

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RBA: Will Australia hike again?

The RBA raised the cash rate for the first time in two years to 3.85% at its February meeting after inflation picked up materially in the second half of 2025. 

The question now is whether it moves again before even seeing the next quarterly CPI print, which isn't due until 29 April.

Deputy Governor Andrew Hauser acknowledged ahead of the meeting that policymakers face a genuinely divided decision, shaped by conflicting economic signals at home and growing instability abroad. 

Financial markets currently assign around a 66% probability to another hike, with a May increase considered virtually certain regardless of what happens Monday.

Key dates

• RBA Cash Rate Decision: Tuesday 17 March, 2:30 pm AEDT
• Governor Bullock press conference: Tuesday 17 March, 3:30 pm AEDT

Monitor

• Any reference from Bullock to further hikes being likely in May
• AUD/USD immediate reaction.
• ASX banks and REITs.

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FOMC: Hold likely, all eyes on the dot plot

The FOMC meets on March 17–18, with the policy statement scheduled for 2:00 pm ET on March 18 and Chair Jerome Powell's press conference at 2:30 pm. CME FedWatch shows a 99% probability that the Fed holds rates at 3.50% to 3.75%. 

The real action is in the Summary of Economic Projections (SEP) and dot plot. The current median dot shows one 25-basis-point cut for 2026. If it shifts to two cuts, that is dovish and bullish for risk assets. If it shifts to zero cuts or adds a rate hike into the projection, markets could react in the other direction.

Further complicating matters, Powell's term as Federal Reserve Chair expires on May 23, 2026. Kevin Warsh is the leading candidate to replace him, viewed as more hawkish on monetary policy. Any comment from Powell on this transition could move markets independently of the rate decision itself.

Key Date

• FOMC Rate Decision + SEP/Dot Plot: Thursday 19 March, 4:00 am AEDT
• Powell press conference: Thursday 19 March, 4:30 am AEDT

Monitor

• Powell's language on oil and tariff inflation.
• 2-year Treasury yield reaction.
• CME FedWatch repricing for any shift in the September cut probability.

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Bank of Japan: Further tightening could be brought forward

The BOJ meets on March 18–19, with the decision expected Thursday morning Tokyo time. The current policy rate sits at 0.75% (a 30-year high), and the January 2026 meeting produced a hold in an 8-1 vote.

Governor Ueda has categorised the March meeting as "live," noting the timeline for further tightening could be "brought forward" if Shunto spring wage negotiations yield stronger-than-expected results. 

Those results are due to begin flowing in during the week, making them the critical input for the BOJ's decision. Nomura expects 2026 Shunto wage hikes to come in around 5.0%, including seniority, with base pay growth of approximately 3.4%. If results confirm that trajectory, the case for a March hike strengthens considerably.

The complication is the global backdrop. Japan imports roughly 90% of its energy needs, and oil around US$100 per barrel is pushing up import costs and threatening to add inflationary pressure. A BOJ hike into a global oil shock would be an unusually bold move. 

Most market participants still lean toward a hold at this meeting, with April or July seen as the more likely timing for the next move.

Key Date

• BOJ Policy Rate Decision (currently 0.75%): Thursday 19 March, morning AEDT

Monitor

• Shunto wage results as the primary trigger for a March hike.
• Ueda press conference language and forward guidance on April and July.
• USD/JPY reaction.

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Oil: Continued volatility

Brent crude briefly touched US$119.50 per barrel earlier in the week before dropping 17% to below US$80, then rebounding toward US$95 on mixed signals from Washington about the Strait of Hormuz. 

As of Thursday, Brent was back over US$100 as Iran launched fresh attacks on commercial shipping and the IEA reserve release failed to bring meaningful relief.

In the scenario where a longer conflict inflicts damage to energy infrastructure, analysts estimate CPI could rise to 3.5% by the end of 2026, with gasoline prices approaching US$5 per gallon in the second quarter.

For this week, oil acts as a macro meta-variable. Every geopolitical headline, ceasefire signal, tanker attack, reserve release, and Trump comment could move equities, bonds and currencies in real time.

Monitor

• Any resumed Strait of Hormuz tanker flow.
• IEA emergency reserve release.
• Trump statements on Iran.
• Energy sector equities.

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