Week Ahead Economic Preview: Week of 16 March 2026

The following is an extract from S&P Global Market Intelligence's latest Week Ahead Economic Preview. For the full report, please click on the 'Download Full Report' link.

Central bank war impact assessments in focus as rate setters meet

The week ahead is dominated by interest rate decisions at the world’s largest central banks, which will reveal policymaker reaction to the Middle East war.

Central bank policy meetings take place in the US, eurozone, Japan, UK, Canada, Switzerland, Australia, Brazil, Sweden, Taiwan and Indonesia. Markets will be looking to see how policymakers gauge the risks to their economies from the Middle East war. The central banks of the US, eurozone and UK in particular will need to decide whether to ‘look through’ the near-term inflationary impact of the energy price rise, and focus instead on shoring up economic growth amid the heightened geopolitical uncertainty, or whether to turn more hawkish to ward off another step-up in inflation.

Stubbornly above target inflation in the US and UK has already caused concern over scope for more rate cuts, and some eurozone policymakers have already turned more hawkish. Likewise, in economies such as Canada, where rate cuts had been anticipated due to lacklustre growth, the energy price shock is encouraging speculation that rates might now be on hold.

In contrast, in economies such as Japan and Australia, where markets have penciled-in more rate hikes, there is now uncertainty as to whether rates might need to be held steady while the potential for economic damage from a prolonged war is assessed. Japan’s Prime Minister, for example, has recently urged the central banks to take a more cautious approach in its hiking cycle.

Much will of course depend on the duration of the war and any disruptions to global energy markets and shipping, meaning the news flow from the Middle East will continue to steer policy expectations. In the meantime, there is also a flurry of economic data to watch over the coming week. This notably includes industrial production numbers for both the US and mainland China, with the latter also releasing retail sales and investment data.

In Europe, inflation data for the eurozone are accompanied by labour markets statistics in the UK. The jobs market in the UK will be especially important to watch, as steep job losses in recent months have been a key concern among dovish policymakers, mirroring labour market concerns in the US. These disappointing employment trends are also evident up to February from the PMI surveys, which underscored how high costs and low business confidence are stymieing hiring in many economies despite global economic growth having returned to its long-run trend rate. That was, of course, prior to the outbreak of war. 

Chart of the week: Global business optimism improved ahead of the Iran war

The S&P Global Business Outlook Survey – based on responses from a panel of 12,000 companies – showed business optimism at a one-year high in February. While the war in the Middle east has superceded the survey, the upturn in business confidence pointed to some encouraging resilience of the global economy ahead of the crisis which could bode well for economic growth should the war prove short-lived, a scenario which – as of early March – fund managers were broadly anticipating according to the Investment Managers’ Index survey.