Central banks warn: rates may rise
Central banks across the U.S., Europe and Asia held interest rates steady this week but warned that surging energy costs tied to the Middle East could force new rate hikes if price shocks persist. Policymakers face a narrow trade‑off — act quickly and risk stalling fragile recoveries, or wait and let inflation become entrenched — and markets are already rotating to safe havens like gold and silver. (bloomberg.com) (commonslibrary.parliament.uk) (news24online.com) (independent.co.uk)
The Fed’s March 17–18 meeting left the policy range anchored at 3.50%–3.75% (FOMC vote 11–1), with officials describing the implications of developments in the Middle East as “uncertain.” (cnbc.com)) Fed officials’ Summary of Economic Projections still embeds a forecast for one rate cut in 2026 even as staff note that near‑term PCE inflation and some inflation‑expectation measures have risen because of the oil shock. (bloomberg.com)) The ECB kept its three key rates unchanged — deposit facility 2.00%, main refinancing 2.15%, marginal lending 2.40% — and its staff now projects headline euro‑area inflation averaging 2.6% in 2026. (ecb.europa.eu)) The Bank of England left Bank Rate at 3.75% (a unanimous MPC vote) and its minutes warned that higher energy costs raise the risk of second‑round wage and price pressures. (bankofengland.co.uk)) The BoE also signalled readiness to tighten further if needed, saying it “stands ready to act” to keep CPI on track to 2%. (bloomberg.com)) Markets have re‑priced policy paths since the outbreak: traders have cut bets on easing and are pricing the possibility of further hikes in some economies, according to Reuters coverage of global central‑bank reactions. (money.usnews.com)) Rates markets have already moved — 5‑year GBP swap rates jumped to about 4.25% from ~3.60% and 5‑year EUR swap rates rose to roughly 2.70% from ~2.30% since the strikes began. (chathamfinancial.com)) Policy pressure stems from a sharp energy shock: the IEA agreed on a coordinated, record release of 400 million barrels of emergency stockpiles on March 11, 2026, even as Brent crude briefly topped $119 a barrel after fresh attacks on energy infrastructure. (iea.org)) Safe‑haven flows have been volatile — spot gold traded near $4,662.51 an ounce and spot silver around $71.62 an ounce amid the oil‑driven swings as metals alternately rallied and then pared gains. (cnbc.com))
