MUFG Notes Busy Schedule for Central Banks Next Week Amid Iran Conflict Uncertainty

06:08 AM EDT, 03/13/2026 (MT Newswires) -- There is an incredibly busy week of central bank meetings next week and however the conflict pans in Iran out between now and these meetings, investors should be in a better position to understand the reaction functions of key G10 central banks by the end of next week, said MUFG.

"Incredibly," eight of the G10 central banks will meet next week, starting with the Reserve Bank of Australia on Tuesday, followed by the Bank of Canada and the Federal Reserve on Wednesday, and then the Bank of Japan, Switzerland's SNB, Sweden's Riksbank, the Bank of England and the European Central Bank on Thursday, pointed out MUFG.

Expectations of rate cuts in Europe have shifted notably, with BoE OIS pricing shifting from about 50bps of cuts this year before the Iran conflict to nearly 20bps of tightening, wrote the bank in a note to clients. The ECB pricing has gone from about 15bps of cuts to nearly 50bps of hikes.

The BoC is now priced for 40bps of hikes versus 10bps of cuts before the conflict, added MUFG. The Fed is still seen as cutting, but now around 20bps of reductions ares priced versus 60bps prior. For the BoJ, there has been limited change with the BoJ before the conflict expected to hike close to two times, similar to the 48bps of tightening currently priced.

If there's a central bank that hikes, it will likely be the RBA on Tuesday, stated MUFG. The RBA has already hiked and Deputy Governor Andrew Hauser spoke this week of inflation being "toxic" and higher than what the RBA was expecting. The market gives a hike next week a 65% probability.

Whether currencies are rewarded by central bank hiking action is really dependent on investors' views on growth, according to MUFG. Hiking into weak economic conditions generally is deemed currency negative.

Sterling (GBP) is actually the fourth-best performing G10 currency since the conflict began (Canadian dollar, US dollar and Australian dollar are the top three, respectively) and has seen the biggest shift higher in yields, according to the bank. Sterling could be deriving support from that, although MUFG sees a scenario where that support could fall away quickly. If risk-off intensifies and global equities suffer larger falls, then higher yields will be less of a support for currencies.

Hiking rates with a clearer positive terms of trade impact has helped AUD perform well, noted the bank. Looking at Australia's export breakdown, mineral fuels, including crude oil, accounted for 27% of total exports in 2025, the second largest category of exports (behind ores, slag & ash).

However, AUD risks are also high and a further spike in crude oil prices that raises global recession risks would likely see that drive a correction lower in AUD. That may well play into RBA considerations next week and with inflation already above target, the risk of a hike is high even given the backdrop of increased global uncertainties.

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