Fra Danske Bank:
Sofie Liv Petry, [email protected], Assistant Analyst
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Today, we expect the ECB to leave the deposit rate unchanged at 2.00% in line with consensus and market pricing. We expect Lagarde to communicate a full commitment to price stability and readiness to act to upward price pressures but at the same time acknowledge heightened uncertainty and that it is too early to draw firm conclusions. Our baseline is unchanged ECB rates in 2026 and 2027 but with a clear upside risk. Read more in: ECB Preview – Hot war, cool heads? , 13 March.
In England, we expect the Bank of England to keep the Bank Rate unchanged at 3.75%. The war in the Middle East has pushed the pause button on further cuts for now. Ahead of the meeting, a fresh jobs report is released with higher unemployment becoming an increasing worry recently. Read more in: Bank of England Preview – Cutting cycle on pause , 13 March.
In Sweden, we and markets expect the Riksbank to keep the policy rate at 1.75%. We expect the main message will be a cautious “wait and see”, without any significant adjustments to the near-term rate path. In terms of forecasts and guidance, however, the current environment is highly uncertain. Read more about our Riksbank preview in: Reading the Markets Sweden , 13 March.
Also in Sweden, Origo inflation expectations will be published today and given recent events, it is reasonable to expect them to rise somewhat. However, it is worth noting that the responses were collected approximately 10 days ago.
We expect the Swiss National Bank (SNB) to keep rates unchanged at 0%. We are attentive to any comments on the recent strengthening of the Swiss Franc, which provides a tricky backdrop for the SNB which struggles with low inflation.
In Norway, Norges Bank’s (NB) regional survey report is released. Growth has developed as expected, so we expect respondents to signal 0.3-0.4% q/q growth in both Q1 and Q2, consistent with NB’s forecast. However, with elevated inflation and a tighter-than-expected labour market, capacity utilization will be the most important piece of information. A significant increase could make it necessary for NB to tighten monetary policy to anchor inflation expectations.
Overnight, China releases Loan Prime Rates, which we expect to be unchanged again as the leading 7-day reverse repo rate has not moved for some time.
Economic calendar
In Japan, with an 8-1 vote split, the Bank of Japan (BoJ) kept rates unchanged this morning at 0.75%, as widely expected. Markets have taken the decision very calmly. While acknowledging risks from increased tension over the situation in the Middle East, the BoJ expects underlying inflation to increase gradually, and it will thus “continue to raise the policy interest rate and adjust the degree of monetary accommodation”. We expect the next rate hike from the BoJ in April, but much hinges on spring wage negotiations and of course energy prices.
In the conflict in the Middle East, tensions escalated as Israeli strikes hit Iran’s Pars gas field, a critical part of the world’s largest natural gas deposit. Iranian media reported that the strikes hit gas tanks and sections of a refinery, marking the first attack on energy production facilities since the war began. In retaliation, Iran launched a ballistic missile and hit the world’s largest liquefied natural gas facility in Qatar later in the evening, causing extensive damage. Earlier in the day, Iran had issued a warning, labelling regional oil and gas infrastructure in Saudi Arabia, the UAE, and Qatar as “direct and legitimate targets,” significantly heightening risks to global energy supplies.
Oil and gas prices rose sharply as big gas facilities in Iran and Qatar were hit and facilities in UAE were attacked. Oil price rose above USD 110/bbl overnight and nears the top from Monday last week. If big energy installations continue to be drawn into the war, energy prices will likely rise much further as production over the medium term is hit.
The gold price fell sharply and firmly below USD 5,000/oz yesterday. The gold price has dropped since the war started which might be caused by higher bond yields and the stronger USD.
In the US at the FOMC meeting, the Fed kept rates on hold in the 3.5-3.75% target, as expected. Powell refrained from strong forward guidance but appeared more concerned about inflation than downside risks to growth. He highlighted uncertainty from higher energy prices and reiterated the Fed’s readiness to adjust policy rates as needed.
Also in the US, February PPI surprised to the upside for the second month in a row coming in at +0.7% m/m SA (cons. +0.3%). However, compared to January, the pick-up in price pressures seems more broad-based this time around as both core services and core goods inflation seem to be picking up. For core goods specifically, this was the highest m/m SA reading (+0.8%) since April 2022, suggesting that tariff-related costs pressures could still be increasing.
In Canada , the Bank of Canada (BoC) kept its policy rate unchanged at 2.25%, as expected. BoC highlighted downside growth risks, while inflation risks have increased due to higher energy prices. The BoC noted that it is “too early to assess the impact of the conflict in the Middle East on growth in Canada,” which complicates sending clear policy signals. The central bank did state that they will look through the immediate impact on inflation of the war but nevertheless stands ready to respond if needed.
In the eurozone , final February inflation figures confirmed flash estimates ahead of the ECB rate decision today, with headline at 1.9% y/y and core at 2.4% y/y.
Equities: Equities ended sharply lower yesterday after opening in positive territory in early European trading. Markets faded throughout the session as geopolitical escalation around Iran intensified, with equity performance showing an almost perfect negative correlation with the move higher in energy prices.
Unsurprisingly, the energy sector outperformed in this environment. More notably, however, defensive consumer sectors led the downside. This suggests an increasing investor focus on the implicit tax on consumption, initially via higher tariffs, and now increasingly through the rapid rise in energy prices. In that sense, the price action points to growing concern around the pressure on real disposable income.
Asian equities are trading in negative territory this morning. European futures are lower, while US futures are broadly unchanged.
FI and FX: Oil and gas prices rose sharply as gas facilities in Iran and Qatar were hit and facilities in the UAE were attacked. The oil price rose above USD 110 per barrel overnight and is nearing the top from Monday last week. As widely expected, the Fed and BoJ kept policy rates unchanged, while their communication highlighted the uncertainty from the war in the Middle East. Today, we look forward to a string of central bank meetings (Riksbank, SNB, BoE and ECB), all expected to stay on hold. While not our base case, a hawkish Lagarde/ECB could naturally temporarily calm down the decline in EUR/USD today. In general, we emphasize that rising global energy prices and tighter global financial conditions would both be supportive factors for the broad USD. We still like our tactical short EUR/USD idea with a target of 1.12. As for the Riksbank, our baseline is that a wait-and-see approach will not rock the boat for the SEK in an environment where macro factors are taking the backseat and geopolitical developments set the scene for FX.
See also our in-depth FI and FX morning comment *
Reading the Markets Denmark: Cheaper DKK in XCCY swap market , 19 March
Research US – Fed review: Staying humble , 18 March
Reading the Markets – Nordics , 17 March
Reading the Markets Norway – NGB auction review: Norges Bank to sell 4Y and 10Y NGBs , 17 March
Reading the Markets USD – Few places to hide aside from the USD , 17 March
China Flash – Rays of light in housing, exports still main driver of growth , 16 March
Bank of England Preview – Cutting cycle on pause , 13 March
ECB Preview – Hot war, cool heads? , 13 March
Report completed: 19 March 2026, 07:00 CEST
Report first disseminated: 19 March 2026, 07:30 CEST
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