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Fed and BoJ hold rates, ECB, BoE and SNB decisions follow today

As expected, the US Federal Reserve held interest rates steady, keeping its key rate in the range of 3.5-3.75%. It seems unlikely to be the last time that the Fed does not touch the interest rate, on the back of prospects of an increase in inflation. In its statement, the Fed flagged tariff and energy inflation risks. The Bank of Japan also kept its monetary policy unchanged. Stocks on Wall Street dipped on Wednesday, following hotter-than-expected producer inflation data, adding to concerns that surging oil prices could harm the economy. Today, the European major central banks will announce their interest rate decisions.

Date 19 mars 2026
Auteur Alessandro Fezzi, Content & Publications
Temps de lecture 5 minutes

Federal Reserve Chair Jerome Powell said on Wednesday that US inflation remains stuck around 3%, with a large part of the overshoot versus the 2% target driven by tariff-related price increases stemming from President Donald Trump’s trade measures. Powell noted that between half and three-quarters of the gap to target may be attributable to tariffs, which the Fed expects to generate a one-off jump in prices that should fade over time, although uncertainty over future tariff rates and the timing of their full pass-through complicates the outlook. He added that the central bank is also closely monitoring an Iran war-driven spike in energy costs, with oil trading above USD 100 per barrel, and how higher prices for diesel, jet fuel and other petroleum products may feed from headline into core inflation. Powell said the Fed is prepared to act if needed and that deciding whether to look through the energy shock will depend on seeing clear progress in bringing core inflation down as the tariff effects recede.

US stocks fall on renewed inflation worries

US equities retreated on Wednesday as higher oil prices, stronger-than-expected producer prices and a cautious message from the Fed reignited concerns about inflation and reduced expectations for interest rate cuts. The Dow Jones Industrial Average closed 1.6% lower at 46,225.15 points, the broad S&P 500 fell 1.4% to 6624.70 points and the technology-heavy Nasdaq 100 lost 1.4%, while US crude prices increased amid escalating Iran-related tensions in the Middle East. US producer prices, which track changes in wholesale prices, rose 0.7% in February, well above the median estimate of 0.3%, showing that inflation was already in a precarious spot prior to the current Middle East conflict that has heightened stagflation fears amid rising oil prices. Core PPI advanced 0.5% month-on-month and 3.5% year-over-year, both figures above consensus estimates.

BoJ keeps rates steady, flags oil inflation risk

The Bank of Japan kept its overnight call rate unchanged at 0.75% on Thursday in a decision that was almost unanimous, with board member Hajime Takata alone arguing for a 25-basis point increase due to upside inflation risks. The central bank warned that higher crude prices linked to the US-Israel conflict with Iran could push consumer prices higher over the medium to long term, although it still expects headline inflation to ease in the near term as earlier food and energy pressures fade. Policymakers reiterated that underlying consumer price inflation is likely to gradually rise to reach the 2% target later in 2026, with the outlook for wages from the current spring pay negotiations seen as key for any further tightening. The yen was little moved by the decision and remains near its weakest levels since mid-2024, while Japan’s Nikkei 225 index fell.

Asia stocks fall on BOJ decision and oil surge

Asian equity markets declined on Thursday following the Bank of Japan’s monetary policy decision. Japan’s Nikkei 225 fell 2.6% and the broader TOPIX lost 2%, while South Korea’s KOSPI, Singapore’s Straits Times Index, China’s Shanghai Composite and CSI 300, and Hong Kong’s Hang Seng index all posted losses as Brent crude rose above USD 110 per barrel on Wednesday and extended gains. The latest oil spike followed Iranian attacks on energy infrastructure across the Middle East, including reported damage to Qatar’s Ras Laffan hub and intercepted missile and drone strikes in Saudi Arabia, raising concerns about prolonged disruptions to shipments through the Strait of Hormuz. Broader risk sentiment was further hit by the Federal Reserve’s rate hold with a hawkish tone on Wednesday, while Australia’s S&P/ASX 200 slipped 1.5% after data showed a rise in the February unemployment rate.

Oil shock complicates central bank’s outlook – ECB, SNB and BoE are expected to hold rates

The European Central Bank (ECB) is expected to keep its main policy rate unchanged at 2% when it meets today, but the recent jump in oil and gas prices following the Middle East crisis has led markets to price in at least one rate hike this year and possibly a second if inflation pressures intensify. This could significantly lift inflation and slightly dampen growth. Economists argue that sustained oil prices above USD 100 and clear second-round effects on wages and inflation expectations would be needed to justify tighter policy.

Markets expect the Swiss National Bank (SNB) to keep its policy rate unchanged at 0% today and through 2026, relying instead on foreign exchange interventions to counter further Swiss franc appreciation as inflation risks remain contained.

The Bank of England will most likely also keep its key interest rate unchanged after sharply revising its inflation forecasts higher. The bank anticipates that elevated gas prices will delay inflation’s return to target. Markets now see the first BoE rate reduction in the first quarter of 2027, implying an “extended pause” in UK monetary policy.

Switzerland’s higher oil price scenario

The State Secretariat for Economic Affairs (Seco) indicated on Wednesday that if oil prices remain well above the baseline assumption of USD 70 per barrel in 2026 and 2027, economic growth would be weaker and inflation higher than currently forecast. In a scenario with oil averaging just above USD 90 this year and just under USD 80 next year, Seco projects Swiss GDP growth of 0.8% in 2026 and 1.6% in 2027, compared with 1% and 1.7% under the baseline, while average inflation would rise to 0.7% in both years instead of 0.4% and 0.5%. Seco stresses that the impact on Switzerland is moderate compared with the euro area, largely because Switzerland is less dependent on oil and gas, energy has a much smaller weight in the consumer basket and the stronger Swiss franc helps to damp price pressures.

The KOF economic institute added that Swiss GDP, adjusted for major international sporting events, is expected to grow by 1% this year, down from a previous forecast of 1.1% and well below the long-term average of 1.8%, and warned that if the currently elevated oil price does not normalise soon, growth prospects for 2026 would deteriorate significantly.

Corporate and economic calendar

Corporate news in focus: Quarterly figures from Accenture, Alibaba, Enel, and FedEx.

Economic data in focus: Swiss trade balance (08:00), Swiss National Bank interest rate decision (09:30), Bank of England interest rate decision (13:00), US building permits (13:00), US Philly Fed manufacturing indicator and weekly initial jobless claims (13:30), European Central Bank interest rate decision (14:15) and ECB press conference (14:45) and US new residential sales (15:00).

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Publisher: LGT Bank (Switzerland) Ltd., Glärnischstrasse 36, CH-8027 Zurich
Editor: Alessandro Fezzi
Source: LGT Bank (Switzerland) Ltd.

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