This Thursday, March 16, at 2:00 AM, the Federal Reserve will announce its interest rate decision for March. This marks the Fed's second meeting of the year and the first since the onset of conflict between the US and Iran. The outcome of this decision and subsequent commentary from Fed Chair Powell are poised to significantly influence market expectations for the US macroeconomy in the coming months and are likely to trigger substantial volatility in gold and dollar markets.
The prevailing market expectation is that the Federal Reserve will maintain the federal funds rate within the current range of 3.5% to 3.75%. According to the CME FedWatch Tool, there is a 99.2% probability of rates remaining unchanged, with only a 0.8% chance of a 25-basis-point cut, making it almost certain that the Fed will not lower rates at this meeting.
The conflict between the US and Iran has driven international oil prices to persist around $100 per barrel, raising the risk of a sharp increase in US inflation for March. Should the conflict prolong, potentially entangling the US and stabilizing oil prices above $100, inflation in the US could gradually become uncontrollable in subsequent months.
For the Federal Reserve, maintaining price stability is a core mandate. If inflation data continues to rise, the Fed may be compelled to adopt a tighter monetary policy. A market shift from expecting rate cuts to anticipating hikes would likely provide significant support for the US Dollar Index.
Also on Thursday, interest rate decisions are due from the Swiss National Bank, the Bank of England, and the European Central Bank. It is highly probable that all three of these central banks will also keep their policy rates unchanged.
The European Central Bank has not cut rates since June 2025. Since February 2024, the core inflation rate in the Eurozone has remained below 3%, indicating that high inflation has been largely contained. Coupled with a decline in the unemployment rate from 6.3% to 6.1% over the past three months, reflecting a robust labor market, the ECB has no compelling reason to pursue further rate cuts.
Similarly, the Swiss National Bank has refrained from rate cuts since 2025. A key difference is that the SNB halted cuts after reducing its benchmark rate to 0%. Switzerland's latest core inflation rate stands at 0.2%, a low not seen since August 2021, bringing it perilously close to deflationary territory, just 0.3 percentage points away. While the SNB may have an underlying willingness to cut rates further, it is constrained by the effective lower bound.
The situation for the Bank of England is more unique, as it is technically still within a rate-cutting cycle, having implemented a 25-basis-point cut as recently as December 2025. The market consensus for a hold in March is primarily due to the Iran-related disruption of the Strait of Hormuz, which pushed oil prices above $100 per barrel—a key factor with the potential to reignite high inflation. Under these circumstances, the BoE's most rational choice is to maintain the status quo.
From Tuesday to Wednesday, interest rate decisions are scheduled from the Reserve Bank of Australia and the Bank of Canada.
This Tuesday at 11:30 AM, the Reserve Bank of Australia will announce its March rate decision. The mainstream expectation is for a 25-basis-point hike, raising the benchmark rate from 3.85% to 4.1%. If realized, the RBA would be the only major central bank tightening policy during this super week. The bank already hiked rates by 25 basis points in February; another hike in March would signal a clear tightening cycle, likely bolstering the Australian dollar's value. The fundamental reason for the RBA's hawkish stance is the rise in Australia's core inflation from 2.9% to 3.4% since June 2025. Failure to act promptly could risk the economy sliding into severe inflation.
On Wednesday at 9:45 PM, the Bank of Canada will announce its rate decision, with the broad expectation being that it will hold its benchmark rate steady at 2.25%. The BoC's last rate hike occurred in October 2025, and it has held rates unchanged in both the December 2025 and January 2026 meetings. The prevailing view is that the BoC's previous rate cuts were primarily a response to US economic sanctions against Canada. With the US currently preoccupied with Middle Eastern affairs and sanctions on hold, the BoC lacks immediate pressure to ease policy further.
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