06:13 AM EDT, 03/16/2026 (MT Newswires) -- The week ahead will be an important one on the central banks front in terms of assessing how G10 central banks are likely to respond to the energy price shock, said MUFG.

The following central banks are scheduled to hold policy meetings this week: the Reserve Bank of Australia (on Tuesday), Bank of Canada (Wednesday), Federal Reserve (Wednesday), Bank of Japan (Thursday), Swiss National Bank (Thursday), Sweden's Riksbank (Thursday), Bank of England (Thursday) and Euroepan Central Bank (Thursday).

The RBA is expected to be the first G10 central bank to hike rates in response to the energy price shock, according to MUFG, noting that is helping the Australian dollar (AUD) to strengthen at the start of this week after it dropped back below the 0.7000 level at the end of last week.

The AUD has benefited from higher yields and commodity prices at the start of this year, noted MUFG. However, the bank noted, a bigger hit to global growth from higher energy prices could begin to weigh more heavily on the AUD further down the road if the Strait of Hormuz block isn't resolved.

For the other G10 central banks, MUFG will be watching closely to see how their policy guidance responds to the Middle East conflict. MUFG said they will have to acknowledge that upside risks to inflation from the energy price shock have risen in the near-term alongside downside risks to growth.

However, the bank added, it is likely to be too soon for most central banks to commit strongly to an updated path of policy action while developments in the Middle East remain highly uncertain.

The Federal Reserve has already signaled that it wasn't in a rush to resume rate cuts this year. A view that has likely been reinforced by recent developments, even after the weak labor market data for February, it noted

In contrast, MUFG expects the BoE and ECB to sound relatively more hawkish than the Fed. The bank estimates a more unanimous Monetary Policy Committee vote to leave rates on hold this week from the BoE after the narrow (5-4) vote last month.

The BoE is likely to express more concern over persistent inflation risks again due to higher energy prices, which have reduced the scope for further rate cuts, said the bank.

Meanwhile, MUFG noted, some ECB policymakers have already started to talk about the possibility of hiking rates if needed to lift the policy rate back into restrictive territory. It is unlikely that President Christine Lagarde will commit to rate hikes this week, but she could open the door, the bank said.

However, the bank doubts that hawkish BoE and ECB policy updates will provide much support for the euro (EUR) and sterling (GBP) against the US dollar (USD), given European economies are facing a bigger negative hit than the United States economy from the energy price shock.