Shockwave of War Is Rippling Through the Global Economy

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Pricing in the overnight swaps market indicates traders are predicting a roughly 42% chance of a hike by July.

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Europe, Middle East, Africa

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The aftermath of a big week for monetary decisions will reverberate around Europe, with remarks by several policymakers on the schedule as well as some key data.

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UK inflation numbers on Wednesday are predicted by economists to show the slowdown in annual price growth halted at 3% in February, in a report that will draw particular attention after Britain’s 10-year gilt yield touched the highest since 2008. 

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That market shift followed the Bank of England’s pivot away from rate cuts to declare itself “ready to act.” Deputy Governor Sarah Breeden, chief economist Huw Pill, and rate-setters Megan Greene and Alan Taylor are all scheduled to speak. 

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From the European Central Bank, which could raise rates if needed as soon as its next decision on April 30, speakers on the calendar include chief economist Philip Lane on Monday. President Christine Lagarde will address the annual ECB and Its Watchers conference in Frankfurt on Wednesday. 

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Swiss National Bank President Martin Schlegel will speak in Zurich on Tuesday following the central bank’s move to restate that its willingness to intervene against war-driven haven flows into the franc has increased. 

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The next day, Sweden’s Riksbank publishes minutes of its own decision, where policymakers kept borrowing costs steady. 

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Some more monetary meetings are planned for the coming days:

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Latin America

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In a busy week for policymaking in Latin America, Brazil’s central bank on Tuesday publishes the minutes of its March 18 decision to deliver a cautious quarter-point cut from a near two-decade high 15%.

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With the war in the Middle East introducing so much uncertainty, BCB chief Gabriel Galipolo and colleagues offered minimal forward guidance in their post-decision statement and are unlikely to break new ground here.

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Latin America’s No. 1 economy will also post the BCB’s monetary policy report, mid-month inflation readings, and February unemployment figures.

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The war in Iran will also be a factor during central bank meetings in Chile and Mexico. For Banco Central de Chile, the conflict has quite likely turned a possible quarter-point rate cut, from 4.5%, to a definite hold, given that the Andean nation imports nearly all its fuel.

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For Banxico, the higher oil prices and a weaker peso stemming from the Middle East conflict have likely tipped the balance in LatAm’s No. 2 economy from good odds for a quarter-point cut to a fairly certain hold.

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Mid-month inflation data posted before Banxico’s board gathers may well cement a decision to keep the key rate at 7% for a second meeting.

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Argentina’s January GDP-proxy data are likely to dovetail with the overall cooling seen in South America’s No. 2 economy since the first quarter of 2025.

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Many analysts see December’s strong output readings as more of a headfake than a trend, and have been marking down their 2026 growth estimates accordingly.

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—With assistance from Brian Fowler, Laura Dhillon Kane, Monique Vanek, Robert Jameson, Ott Ummelas, Ntando Thukwana, Alister Bull and Simon Lee.

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