U.S. PPI, Fed Decision and Powell’s Press Conference Loom on a Day With Many Other Central Bank Rate Decisions as Well
March 18, 2026
There’s been scant net movement in the dollar overnight. The Federal Open Market Committee is not expected to change the 3.5-3.75% federal funds target range, but today’s meeting has created considerable attention. It’s Chairman Powell’s next-to-last meeting as chairman, but he could stay on the committee into 2028 when his 14-year term as an at-large Board Governor expires. Almost certainly, he will not yet indicate his decision on that final item. The Middle East conflict and spike of energy prices amid a closed Strait Hormuz inject a huge new element into a complicated backdrop to be considered by policymakers. Updated Fed forecasts will be unveiled of growth, unemployment, inflation and member preferences regarding the most appropriate future path of their interest rate.
The release of U.S. producer price data is also set for today; actual results will be weighed against a street consensus that anticipates an unchanged 2.9% year-on-year rise of all prices and a marginally higher 3.7% comparison when excluding food and energy. Other scheduled releases involve factory orders and Treasury-compiled capital flows, and investors already have learned of a deep 10.9% dive in U.S. mortgage applications (most in 24 weeks) along with an 11-week high in the 30-day fixed mortgage rate.
Domestic financial markets have been upbeat this Wednesday. Equities in Asia climbed 2.9% in Japan, 5.0% in South Korea and over 1% in Taiwan, Indonesia and Malaysia. U.S. stock futures show gains of 0.3-0.5%, led by the tech sector, and major European stock market advances have been larger than the U.S. indications. Conversely, 10-year sovereign debt yields have moved lower, dropping by five basis points in Japan and the United Kingdom, three bps in Euroland, and two basis points in the U.S. and Switzerland. Precious metal hedges like gold and silver have relinquished more ground.
West Texas Intermediate crude oil is 0.9% softer but still very pricey with a $95 per barrel handle. Israel assassinated another top Iranian official, but the war and lack of ship traffic in the region go on.
The National Bank of Morocco’s policy interest rate was left unchanged at a 3-1/4 year low of 2.25%. The rate had crested at 3.0% from March 2023 to June 2024 and has been at the current level since a 25-basis point cut a year ago.
Somewhat surprisingly, the Central Bank of Brazil’s 15.0% Selic interest rate was not reduced. Between September 2024 and June 2025, it was lifted in several steps by a total of 450 basis points from 10.5%, a trough that only lasted 4 months. Consumer price inflation in Brazil had receded from 12.1% in April 2022 to 3.2% by mid-2023 but rebounded as far as 5.5% by April of last year. True, inflation last month was down to a 22-month low of 3.8%, but the sharp rise in global energy prices and their uncertain future argues for policy caution. So do stubborn service sector inflation and some labor market tightness.
Policymakers at the Central Bank of Iceland today followed Australia’s lead yesterday, raising the Icelandic 7-day term rate by 25 basis points in a 3-2 decision that included two dissents favoring an increase of 50 basis points. It was the bank’s first rate increase since August 2023, and the new rate level becomes 7.5%, which comfortably exceeds the 5.2% consumer price inflation readings in both January and February. Policymakers are aiming for an inflation target of 2.5% and took today’s action in spite of more sluggish economic growth.
Another scheduled central bank decision on interest rates today came from Uzbekistan, where a lofty 14.0% level was retained. The last rate change in March 2025, a hike of 50 basis points, merely reversed a similarly sized cut in July 2024. A 14.0%, the rate is still three full percentage points below the briefly held peak of 17% in the spring of 2022, not long after Russia’s invasion of Ukraine. Uzbekistani CPI inflation remains stubbornly above 7.0%, and robust growth, geopolitical strains, and distance from the central bank’s 5% inflation target argue for policy caution.
The eagerly awaited U.S. February producer price figures are worrisome. Even before any direct impact from the Middle East war that began suddenly at the end of the month, a 3.9% on-year pace of core PPI excluding food and energy was its highest in 13 months and 0.4 percentage points more than in January. Producer prices for goods recorded their largest monthly increase in 30 months. Overall PPI inflation of 3.5% was a half percentage point above January’s reading, which investors were anticipating to be repeated in February.
Euroland consumer price inflation in February, 1.9%, matched the preliminary estimate, which had been a 2-month high after January’s 16-month low of 1.7%. Food inflation was marginally lower, but services, energy, and industrialized goods all contributed to the uptick of overall inflation. While inline with target, this report does not embody the Middle East war’s impact, which has flipped market expectations of ECB rate cuts later this year to a new forecast that foresees the possibility of a rate hike in 2026 as a coin toss. The ECB Governing Council meets Thursday and is not expected to make a rate change then.
Economic data released in South Africa today included a lower-than-forecast and 8-month low consumer price inflation rate of 3.0%, a core inflation rate also down to 3.0%, and stronger retail sales in January (up 0.9% versus December and 4.2% year-on-year).
Japan’s trade balance was in better-than-forecast shape in February, producing an unexpected seasonally unajusted JPY 57 billion surplus equivalent to a 374 billion yen deficit when adjusted for seasonal variation.
Aside from the aforementioned U.S. interest rate announcement later today, the Bank of Canada is scheduled to reveal its latest interest rate decision within this hour. A change in its 2.25% rate level is not anticipated.
Copyright 2026, Larry Greenberg. All rights reserved.
Tags: Central Bank of Brazil, Central Bank of Iceland, Central Bank of Uzbekistan, Euroland CPI
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