Central banks hold; jobs stay firm
Central banks took a cautious stance this week: the Federal Reserve and the ECB held policy rates in March as Iran-driven energy risks and inflation uncertainty linger. The ECB set a 2026 inflation forecast around 2.6%, the Bank of Canada kept its key rate at 2.25%, and US jobless claims fell to 205,000 last week — a sign labor markets remain resilient despite geopolitical shocks. (themortgagereports.com, centralbanking.com, ca.finance.yahoo.com, finance-commerce.com
The Fed’s post‑meeting materials show the federal‑funds target range at 3.50%–3.75% and the committee’s Summary of Economic Projections has a median end‑2026 rate around 3.4%, signaling officials still expect roughly one easing this year. (federalreserve.gov) (bloomberg.com) Eleven of the 12 FOMC participants voted to maintain the current stance, producing an 11–1 decision that underpinned a “higher‑for‑longer” pricing across short‑term money markets. (cnbc.com) The ECB’s staff projections now target headline euro‑area inflation averaging 2.6% in 2026 and use a cut‑off date of March 11 for the new forecasts, a clear upward revision from December driven by higher energy prices. (ecb.europa.eu) Under a severe Iran‑related scenario the ECB’s modelling shows inflation could peak at about 6.3% in early 2027, a contingency the bank flagged when stressing readiness to tighten further if energy‑price shocks persist. (bloomberg.com) The Bank of Canada left the overnight target at 2.25% (Bank Rate 2.50%, deposit rate 2.20%) and highlighted that the war in the Middle East has raised near‑term inflation and growth risks, including supply disruptions via the Strait of Hormuz. (bankofcanada.ca) Weekly US initial claims fell 8,000 to a seasonally adjusted 205,000 for the week ending March 14, below the Bloomberg median forecast of 215,000, while continuing claims were reported near 1.86 million—both readings consistent with unusually low layoffs. (bloomberg.com)
