FX NOW! THE WEEK AHEAD – An FX compass in Central Bank Weeks (16.03.2026)

Central Bank Meetings:

⚪ Australia 17.03.2026

Expected:4.10% (hike 25bp – probability: 63%)

Australia faces a mixed outlook over 2026 and 2027. Real GDP is expected to grow by around 2% in 2026 and then gradually firm toward the low‑2% range in 2027, as tighter financial conditions weigh on demand, but population growth and business investment provide some support. Underlying inflation is projected to ease only slowly: after running above the 2–3% target range into early 2026, it is now expected to move back inside the band towards the end of 2026 but not clearly toward the midpoint until sometime in 2027, assuming no major external shocks and a steady disinflation process. The unemployment rate is forecast to edge up and then stabilize, hovering around 4.3–4.5% through 2026 and 2027, consistent with a modest loosening in labor market conditions rather than a sharp downturn. The policy rate is anticipated to remain restrictive through most of 2026 with 3 hikes anticipated, and gradual easing expected for 2027.

⚪ Canada 18.03.2026

Expected:2.25% (unchanged – probability: 88%)

Canada’s economy faces a cautious outlook through 2026 and 2027, marked by subdued growth, gradual disinflation, and a softening labor market. Real GDP growth is projected at around 1.3% in 2026, remaining below potential due to high interest rates and fiscal restraint, before edging up toward 1.5–1.8% in 2027 as monetary policy eases further and household spending recovers. Headline CPI inflation is expected to hover near the 2% target through much of 2026 but with core measures easing only modestly from recent sticky levels around 2.5%, settling closer to target midpoint by late 2027 amid continued supply chain normalization. The unemployment rate is forecast to peak near 6.5–7.0% in 2026 amid slower hiring, then stabilize around 6.5% through 2027, reflecting a soft landing rather than recessionary pressures. The Bank of Canada is likely to hold rates at restrictive in 2026 with up to 2 hikes in the cards before resuming gradual easing toward neutral in 2027.

USA 18.03.2026

Expected: 3.75% (unchanged – probability: 98%)

The US economy is projected to maintain steady but moderate expansion through 2026 and 2027, with growth supported by consumer spending and productivity gains despite tighter policy headwinds. Real GDP is expected to expand by around 2.5% in 2026, aligning with potential output as investment and exports provide modest tailwinds, before hovering back to 1.9–2.0% in 2027. Core PCE inflation is forecast to ease gradually from near 2.6% in 2026 but remain above the Fed’s 2% target in 2027. The unemployment rate is anticipated to rise modestly to about 4.5% through 2026, reflecting slower hiring amid restrictive rates, then stabilize near 4.3–4.4% in 2027 as growth supports a balanced softening rather than sharp weakening. The Federal Reserve is likely to pause at neutral levels into early 2026 before resuming gradual easing by the end of 2026 with 1 cut in the cards, prioritizing a sustainable return to 2% inflation while monitoring labor market resilience.

⚪ Japan 19.03.2026

Expected:0.75% (unchanged – probability: 94%)

Japan’s economy is projected to grow modestly through 2026 and 2027, supported by wage gains and fiscal stimulus but tempered by rising rates and external headwinds. Real GDP growth is expected at around 0.8% in 2026, aligning with potential output as domestic demand (consumption and capex) provides support, before edging up to 0.9–1.2% in 2027 amid gradual recovery and policy offsets to global trade risks. CPI inflation is forecast to remain at the BoJ’s 2% target through 2026 and 2027, driven by persistent services and food costs, before moderating closer to target as supply dynamics stabilize. The unemployment rate is anticipated to hold steady near 2.5% across 2026–2027, reflecting near-full employment with solid wage growth sustaining a tight market despite mild demographic pressures. The Bank of Japan is likely to continue gradual normalization, raising rates in 25bp increments 2-3 times to a neutral 1.5% by mid-2027.

⚪ Switzerland 19.03.2026

Expected: 0.00% (unchanged – probability: 93%)

Switzerland’s economy is set for modest growth through 2026 and 2027, buoyed by domestic resilience and easing trade tensions but constrained by global uncertainties and low inflation. Real GDP growth is projected at around 1.2% in 2026, reflecting recovery from tariff impacts and steady private consumption, before accelerating to 1.5% in 2027 as exports and investment rebound with improving European demand. CPI inflation is expected to stay subdued at 0.4% in 2026 amid franc strength and low energy prices, rising modestly to 0.7% in 2027, well below the SNB’s target—as rental and service costs remain tame. The unemployment rate is forecast to ease to about 3.0% on average in 2027 from slightly higher levels in 2026, maintaining near-full employment with stable hiring in a resilient services sector. The Swiss National Bank is anticipated to hold its policy rate at 0% through most of 2026 with only 1 hike likely in the December 2026 meeting, prioritizing currency stability and low inflation pressures over any need for quick tightening.

⚪ Sweden 19.03.2026

Expected:1.75% (unchanged – probability: 95%)

Sweden’s economy is poised for a robust recovery through 2026 and 2027, fueled by monetary easing, fiscal support, and rebounding household spending after years of stagnation. Real GDP growth is projected at 2.5% in 2026, marking a sharp acceleration from recent weakness, before moderating slightly to 2.0–2.5% in 2027 as capacity constraints emerge amid strong domestic demand. CPI inflation is expected to dip well below 2% in 2026 due to base effects like lower food VAT and subdued wage pressures, then normalize toward the Riksbank’s 2% target by 2027. The unemployment rate is forecast to decline from around 8–9% in 2026 to 7.5–8.0% in 2027 as hiring picks up with economic momentum. The Riksbank is likely to pause rate cuts, holding steady throughout most of 2026 before a potential hike in late 2026 or early 2027.

⚪ UK 19.03.2026

Expected:3.75% (unchanged – probability: 98%)

The UK economy is expected to see modest growth through 2026 and 2027, supported by easing inflation and policy normalization but weighed down by labor market softening and fiscal pressures. Real GDP growth is forecast at 1.0% in 2026, remaining in weak territory before strengthening to 1.5% in 2027 as productivity improves and global trade stabilizes. CPI inflation is projected at above the BoE’s 2% target at around 2.5% through 2026–2027, with services pressures easing due to base effects and softer wage growth. The unemployment rate is anticipated to rise to 4.8–5.3% in 2026 amid slower hiring, then stabilize around 5.0% into 2027, reflecting a controlled softening rather than sharp deterioration. The Bank of England is likely to hold rates at current levels in all of 2026 with only an off-chance hike towards the end of 2026.

⚪ ECB 19.03.2026

Expected:2.00% (unchanged – probability: 95%)

The Eurozone economy is projected to experience steady but modest expansion through 2026 and 2027, driven by domestic demand and fiscal measures amid global trade uncertainties. Real GDP growth is expected to average around 1.1–1.2% in 2026, supported by household consumption and German fiscal stimulus, before rising to 1.4–1.5% in 2027 as investment and exports recover. HICP headline inflation is forecast to ease to 2.0% in 2026 from recent levels near target, stabilizing close to the ECB’s 2% goal by 2027 as energy base effects and wage moderation take hold. The unemployment rate is anticipated to hold near 6.0–6.5% through 2026–2027, reflecting resilient employment gains that support consumption despite slower overall activity. The ECB is likely to maintain its deposit rate within the 2.0 – 2.5% in 2026 with an implied effective rate of currently 2.35%.