Global Central Banks Brace for Inflation Resurgence as Dollar Weakens Over 1%

Bloomberg News, Beijing, March 20 — On Thursday, all non-U.S. currencies strengthened, with the US dollar index under pressure, falling over 1% in late North American trading hours. Central banks in the US, Japan, the UK, Canada, and the Eurozone held policy meetings this week, along with several emerging economies, marking a rare “super central bank week.”

On Wednesday, the Federal Reserve and the Bank of Canada both decided to keep interest rates unchanged; on Thursday, the Bank of Japan, the Bank of England, the European Central Bank, as well as the central banks of Switzerland and Sweden, made the same decision.

These central banks explicitly stated they would remain vigilant, concerned that rising energy prices could trigger inflation across broader economic sectors. Even Brazil’s central bank, which has the highest interest rates among major economies, only chose to cut its benchmark rate slightly by 25 basis points to 14.75%, compared to market expectations of a 50 basis point cut.

“Hearing about the escalation of the Iran situation seems to be a turning point for markets, as the conflict is no longer just about military headlines or the Strait of Hormuz blockade,” said Haru Chanana, Chief Investment Strategist at Saxo Bank in Singapore. “It is now impacting the lifeblood of the global energy system. What’s unsettling the markets now is the increasing risk of stagflation.”

Editor: Ma Mengwei

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