Iran conflict reshapes rate outlook
Middle East tensions drive oil above $100, forcing central banks into a stagflationary standoff across major economies.
Global equities under pressure
KOSPI falls 6.5%, Nikkei drops 3.5% and FTSE 100 enters correction territory as risk-off sentiment deepens.
China pledges openness amid trade pressure
Premier Li Qiang commits to balanced trade and greater market access at the China Development Forum in Beijing.
1 – Global Business and Economic Overview
Global equity markets suffer steep declines as Iran conflict widens
A sharp sell-off swept world equity markets on Monday as the ongoing conflict in the Middle East continued to rattle investor confidence. Asian bourses led the decline, with South Korea's KOSPI dropping over 6% and Japan's Nikkei 225 falling 3.5%. European indices followed, with the FTSE 100 entering correction territory. US futures pointed sharply lower, signalling a fifth consecutive week of losses on Wall Street.
Oil surge above $100 stokes stagflation fears globally
Brent crude has surged past $113 per barrel amid fears of prolonged disruption to Strait of Hormuz shipping lanes, while WTI crude breached $100. The price shock is feeding directly into transport and production costs worldwide. Economists warn the sustained energy spike risks reigniting inflation just as central banks had hoped to begin easing — creating a stagflationary policy bind across the US, Europe and Asia-Pacific.
Central banks hold firm in face of energy-driven inflation reset
The Bank of England, European Central Bank and Bank of Japan all voted to hold rates steady last week, joining the Federal Reserve in a policy freeze. The ECB raised its 2026 inflation forecast to 2.6% and slashed growth to 0.9%, with ECB President Lagarde warning the bank is "well-positioned to deal with a major shock that is unfolding." Markets are now pricing the possibility of rate hikes at some central banks previously expected to cut.
Briefing
- RBA raised rates 25bp on 17 March, reinforcing its tighter-for-longer stance as domestic inflation remains above target.
- Oil prices above $100/bbl remain the most direct transmission channel into rates, transport and consumer pricing globally.
- The BoE voted 9-0 unanimously to hold — its first such unanimous decision since September 2021.
- Gold suffered its worst two-day rout since the pandemic, dropping sharply even as geopolitical risk elevated.
- Currency markets continue to favour the US dollar as a safe haven, tightening financial conditions for commodity-importing nations.
China pledges open economy as trade tensions linger
Chinese Premier Li Qiang pledged to further open China's economy to foreign firms and pursue more balanced trade with global partners at the annual China Development Forum in Beijing. The premier committed to importing more high-quality foreign goods and expanding the global trade pie, seeking to ease concerns from major trading partners about overcapacity and trade practices. Senior executives from Apple, Samsung, Volkswagen and major financial institutions attended the forum.
US economy shows resilience but housing market buckles
Despite a resilient manufacturing reading from the Philadelphia Fed, US new home sales collapsed 17.6% to their lowest level since 2022, underscoring the two-speed nature of the American economy. The GDPNow estimate was revised down to 2.3%, and with mortgage rates heading back toward 6.5% and oil above $96, consumer-facing sectors are under increasing pressure. The Fed held rates steady, though political pressure on Chair Powell added a further layer of policy uncertainty.
Market Pulse
Cross-asset price action now reflects a world in which inflation is falling more unevenly, growth is diverging sharply by region, and higher energy costs have become the key catalyst for repricing risk across equities, bonds and currencies alike.
2 – Key Financial Indicators
Central Bank Policy Rates
| Central Bank | Current | Next Meeting | Last Change |
|---|
| Reserve Bank of Australia (RBA) | 4.10% | 5 May 2026 | Mar 17, 2026 (+25bp) |
| Bank of England (BOE) | 3.75% | 7 May 2026 | Dec 18, 2025 (−25bp) |
| European Central Bank (ECB) | 2.15% | 17 Apr 2026 | Jun 05, 2025 (−25bp) |
| Federal Reserve (FED) | 3.75% | 29 Apr 2026 | Dec 10, 2025 (−25bp) |
| Bank of Japan (BOJ) | 0.75% | 30 Apr 2026 | Dec 19, 2025 (+25bp) |
| Reserve Bank of New Zealand (RBNZ) | 2.25% | 8 Apr 2026 | Nov 26, 2025 (−25bp) |
| Swiss National Bank (SNB) | 0.00% | 19 Jun 2026 | Jun 19, 2025 (−25bp) |
| People's Bank of China (PBOC) | 3.00% | N/A | May 20, 2025 (−10bp) |
Central Bank Policy Rates
Current policy rate (%)
Forex (vs USD)
| Pair | Rate | % Change |
|---|
| USD/AUD | 1.4372 | +0.950% |
| USD/GBP | 0.7523 | +0.380% |
| USD/EUR | 0.8674 | +0.360% |
| USD/JPY | 159.58 | +0.230% |
| USD/NZD | 1.7254 | +0.710% |
| USD/CAD | 1.3730 | +0.050% |
| USD/CHF | 0.7901 | +0.280% |
Global Indices
| Index | Last | Day Change |
|---|
| Dow Futures (23 Mar) | 45,302 | −720.10 (−1.56%) |
| Dow Jones (21 Mar) | 45,598.46 | −443.98 (−0.96%) |
| S&P 500 (23 Mar) | 6,530 | −41.00 (−0.62%) |
| NIKKEI 225 (23 Mar) | 51,515.49 | −1,857.04 (−3.48%) |
| HANG SENG (23 Mar) | 24,234.37 | −1,042.96 (−4.13%) |
| DAX (22 Mar) | 22,380.19 | −459.37 (−2.01%) |
| CAC 40 (22 Mar) | 7,665.62 | −142.25 (−1.82%) |
| KOSPI (23 Mar) | 5,405.75 | −375.45 (−6.49%) |
| FTSE 100 (22 Mar) | 9,918.33 | −145.17 (−1.44%) |
Crypto
| Asset | USD | Mkt Cap | Chg |
|---|
| Bitcoin (BTC) | 68,143.64 | $1.36T | −1.46% |
| Ethereum (ETH) | 2,038.54 | $246.03B | −3.31% |
| Tether (USDT) | 0.9999 | $184.17B | +0.01% |
| XRP (XRP) | 1.37 | $84.21B | −2.68% |
| Binance Coin (BNB) | N/A | N/A | N/A |
| Solana (SOL) | 85.87 | $49.13B | −2.61% |
| USD Coin (USDC) | 1.00 | $78.94B | +0.01% |
| Dogecoin (DOGE) | 0.0904 | $15.29B | −1.63% |
Commodities
| Commodity | USD | % Change |
|---|
| Gold | 4,239.84 | −8.02% |
| Silver | 62.175 | −10.75% |
| Copper | 5.2743 | −1.86% |
| WTI Crude | 100.33 | +2.10% |
| Brent Crude | 113.76 | +1.57% |
| Natural Gas | 3.118 | +0.02% |
| Ethanol | 2.00 | −0.01% |
Inflation Rates vs GDP
| Country | Current | Prev. | Target | GDP $B | GDP Gth |
|---|
| Australia | 3.8% | 3.8% | 2.5% | 1,752 | 80% |
| United Kingdom | 3.0% | 3.4% | 2.0% | 3,644 | 10% |
| Euro Area | 1.9% | 1.7% | 2.0% | 16,406 | 20% |
| United States | 2.4% | 2.4% | 2.0% | 29,185 | 70% |
| Japan | 1.5% | 2.1% | 2.0% | 4,026 | 30% |
| Switzerland | 0.1% | 0.1% | 2.0% | 937 | 20% |
| China | 1.3% | 0.2% | 2.0% | 18,744 | 120% |
Inflation: Current vs Target
Current inflation (teal) vs 2% target (claret line)
Other Matrix
| Country | Pop (m) | Jobless | Debt/GDP | Curr. Acct |
|---|
| Australia | 27.40 | 4.3% | 43.80 | −2.90 |
| United Kingdom | 69.49 | 5.2% | 93.60 | −2.20 |
| Euro Area | 351.38 | 6.1% | 87.10 | +1.60 |
| United States | 342.28 | 4.4% | 124.30 | −3.90 |
| Japan | 123.80 | 2.7% | 236.70 | +4.70 |
| Switzerland | 9.05 | 3.2% | 15.50 | +5.10 |
| China | 1,405.00 | 5.3% | 88.30 | +2.20 |
Current Account: Balance of trade, plus net income from abroad and direct payments.
GDP ($B) vs GDP Growth (%)
GDP in $B (teal) | GDP Growth index (claret)
Other Matrix — Multi-line Comparison
Jobless Rate | Debt/GDP | Current Account across economies
Global Overnight Index Rates
| Currency | Benchmark Rate | Acronym | Latest Rate |
|---|
| 🇺🇸 USD | Secured Overnight Financing Rate | SOFR | 4.29% |
| 🇪🇺 EUR | Euro Short-Term Rate | €STR | 2.17% |
| 🇬🇧 GBP | Sterling Overnight Index Average | SONIA | 4.21% |
| 🇯🇵 JPY | Tokyo Overnight Average Rate | TONAR | 0.77% |
| 🇨🇭 CHF | Swiss Average Rate Overnight | SARON | 0.20% |
| 🇦🇺 AUD | Australian Overnight Index Average | AONIA | 4.00% |
| 🇨🇦 CAD | Canadian Overnight Repo Rate Average | CDOR | 4.97% |
| 🇳🇿 NZD | 90-Day Bank Bill Rate | BKBM | 3.32% |
3 – Economic Dates
KEY GLOBAL ECONOMIC DATES: 23 MAR 2026 – 27 MAR 2026
Australia · United Kingdom · Europe · Switzerland
Mon 23 Mar
Australia
No major scheduled releases. Markets continue to assess the RBA's 17 March rate decision and the tighter policy outlook for the near term.
Tue 24 Mar
Europe (Flash PMI)
S&P Global flash PMI data for the euro area released — the first key indicator to gauge the economic fallout from the Middle East conflict on European business activity.
Tue 24 Mar
United Kingdom (Flash PMI)
UK Flash Composite PMI for March, closely watched for signs of business confidence following BoE's unanimous hold decision and rising energy costs.
Wed 25 Mar
United Kingdom (CPI)
February CPI release. A key data point for the BoE as it monitors whether energy-driven price pressure is feeding into core inflation and wage expectations.
Thu 26 Mar
Europe
ECB commentary and regional data releases expected. Markets will parse any guidance on the ECB's appetite to counter an oil-driven inflation reset with rate hikes.
Fri 27 Mar
United Kingdom (Retail Sales)
February retail sales figures. Expected to show pressure on consumer spending as higher energy costs and sticky inflation weigh on household budgets.
Week of 23 Mar
Switzerland
Economic sentiment indicators and SNB commentary monitored closely. Switzerland's near-zero inflation provides some buffer, but global energy shocks limit policy independence.
United States · Japan · New Zealand · China
Mon 23 Mar
Japan (CPI)
February National CPI release — important for the BoJ's normalisation path. Any upside surprise from energy costs could reinforce further tightening signals from Governor Ueda.
Tue 24 Mar
United States (Flash PMI)
S&P Global Flash US Composite PMI for March. Richmond Fed Manufacturing Index also due. Both will help gauge how quickly higher oil is filtering into US business conditions.
Tue 24 Mar
United States (Productivity)
Q4 final productivity and unit labour cost revisions. Key for Fed's assessment of underlying inflationary pressures separate from the energy shock.
Wed 25 Mar
United States (Current Account)
Q4 current account balance and February trade price indices. Closely watched for signs of dollar strength feeding into import price dynamics amid geopolitical uncertainty.
Fri 27 Mar
United States (Consumer Sentiment)
University of Michigan Consumer Sentiment final reading for March. Expected to reflect growing anxiety over energy prices, market volatility and geopolitical risk.
Week of 23 Mar
New Zealand
Business confidence surveys and high-frequency economic indicators monitored ahead of the 8 April RBNZ meeting. GDP and inflation trends central to next policy step.
Week of 23 Mar
China
Industrial output, retail sales and property investment data tracked for signs that early-year momentum is being sustained despite global trade headwinds and energy cost pressures.
4 – Economic Outlook
Overall Global Outlook
The next fortnight will be dominated by energy-driven inflation risk, central bank signalling and acute regional divergence. The Iran conflict has fundamentally disrupted what was emerging as a co-ordinated global disinflation narrative, replacing it with a more complex backdrop where supply-side shocks can once again force policy reversals. Over the next quarter, the critical question is whether higher oil remains a temporary shock or broadens into structural inflation via transport, food, industrial input costs and wage expectations. Central banks that had been positioned to ease are now frozen — or, in some cases, facing pressure to raise rates. Equity markets are pricing a more difficult growth outlook, and bond markets are repricing accordingly. The stagflationary combination of rising prices and slowing growth represents the most challenging policy environment since 2022.
Australia
Australia enters the coming fortnight having just tightened policy, with the RBA's 17 March +25bp rate rise reinforcing a firm anti-inflation bias. Domestic inflation has remained stubbornly above target, and the global energy shock adds upside pressure just as some had hoped for relief. Over the next quarter, growth is expected to slow further as higher borrowing costs compound cost-of-living pressures on households. Business investment remains cautious. The RBA's next meeting on 5 May will be closely watched for whether the tightening cycle has peaked or whether further hikes remain on the table.
United Kingdom
The UK faces a particularly difficult policy balance. The BoE's unanimous 9-0 hold — the first since September 2021 — reflects a MPC acutely aware that both cutting and hiking carry real risks. Inflation is above target and sensitive to energy, while domestic demand is weak and the housing market is softening rapidly under the weight of elevated mortgage rates. Over the next quarter, the outlook is one of constrained household spending, careful central bank communication, and persistent sensitivity in sterling and gilts to any upside inflation surprise. An early easing is now unlikely.
Europe
Europe remains the most exposed major region to imported energy dynamics. The ECB has already raised its 2026 inflation forecast to 2.6% and cut growth to 0.9%, and the possibility of rate hikes — previously unthinkable — is now being priced by markets. The next quarter is likely to be defined by cautious ECB messaging, modest activity and an intensified effort to prevent temporary price pressure from becoming structurally embedded. German fiscal expansion provides some buffer, but industrial weakness in key economies creates a fragile underpinning for any recovery thesis.
United States
The US retains the strongest relative demand profile among major developed economies, yet also confronts the most visible policy trade-off. Higher oil complicates the Fed's task by lifting inflation risk while activity data softens at the margin. New home sales have collapsed, GDPNow has been revised down to 2.3%, and consumer confidence is fragile. Political pressure on the Federal Reserve Chair adds an additional layer of institutional uncertainty. The next quarter could be characterised by alternating concerns around stagflation, delayed easing and resilience only in select domestic sectors such as defence and reshoring-linked manufacturing.
Japan
Japan's outlook continues to be shaped by imported inflation, currency sensitivity and the evolving normalisation path of the Bank of Japan. The BoJ held rates at 0.75% last week with an 8-1 vote, and warned that rising oil prices from the Middle East conflict would exert upward pressure on inflation. Over the next quarter, the BoJ faces a difficult calibration: any sustained energy-driven price rise could reinforce further tightening, but weak real-income dynamics mean consumer demand may remain fragile. Governor Ueda's guidance in coming weeks will be pivotal for yen and yield curve positioning.
New Zealand
New Zealand remains highly data-dependent, with GDP and inflation trends central to the next RBNZ policy step at the 8 April meeting. The near-term backdrop suggests caution rather than conviction. The RBNZ has been easing since late 2025, but the renewed energy shock introduces upside inflation risk that could slow the easing pace or pause it altogether. Over the next quarter, markets will look for clearer evidence on whether slower domestic demand is sufficient to offset imported inflation pressure and maintain a credible downward trajectory toward the 2% target.
Switzerland
Switzerland continues to enjoy relatively benign inflation compared with peers — the 0.1% reading leaves the SNB with considerable room relative to its mandate. However, it cannot fully decouple from global energy and currency developments. The Franc's safe-haven status has strengthened amid geopolitical uncertainty, which could weigh on export competitiveness over the coming quarter. The SNB's next move is likely to involve careful communication around external stability and management of any spillover from broader European and global volatility rather than any imminent rate change.
China
China began 2026 on a somewhat firmer footing, with stronger industrial and retail data underpinning confidence. Premier Li Qiang's pledges at the China Development Forum signal a continued commitment to openness and balanced trade. However, the near-term outlook still depends on whether domestic confidence can be sustained in the face of weaker global demand, higher energy costs and ongoing trade friction. Policy support remains important, particularly for investment, property sentiment and regional trade spillovers. The PBOC has room to ease further if growth disappoints, though currency considerations constrain aggressive action.
