BoE Preview: Forecasts from 10 major banks, eyeing a hat-trick caught between a rock and a hard place

The Bank of England (BoE) will announce its decision on Thursday, March 17 at 12:00 GMT and as we get closer to the release time, here are the expectations forecast by the economists and researchers of 10 major banks.
The BoE is widely expected to raise the benchmark interest rate by 25 bps from 0.50% to 0.75%, marking a lift-off for a third consecutive meeting, amid Ukraine crisis-led uncertainty, growth concerns and raging inflation.

Conflicting reports on the state of Russo-Ukraine peace talks, with the FT touting significant progress towards a potential 15-point peace plan but the Independent saying that Ukraine has rejected a Russian neutrality proposal, are giving oil traders plenty to think about. Having come within $1.0 of retesting the $100 level on Wednesday, front-month WTI futures are back to trading in the mid-$90s, not too far above earlier session lows and Tuesday’s weekly lows just under $94.00. At current levels in the $96.00s, WTI is up just over $1.50 on the day, marking some much-needed respite given prices had fallen over $14 over on Monday and Tuesday.

Official US inventory data released not long ago was bearish, with US crude oil inventories growing by 4.3M barrels, well above the expected 1.375M barrel draw. Distillate stocks also saw a surprise build. This, alongside mixed Russo-Ukraine reports, has helped crude oil prices to stave off further declines as a result of concerns that lockdowns in China might hit demand. Ahead, WTI traders will be keeping an eye on the upcoming Fed meeting to see if it has any read across to risk appetite that might impact oil prices.

With WTI holding steady for now in the $95.00 area and above its 50-Day Moving Average around $93.00, the oil bulls will, for now, remain comfortable that the long-term uptrend in play since December 2021 is not yet dead. If anything, the recent more than 25% correction from earlier monthly highs has brought prices back to the previous trend. But headline risk remains elevated and a further widening of China lockdowns and progress in Russo-Ukraine peace talks could easily see WTI test the $90.00 area.

Ukraine has reportedly rejected Russian claims that it was open to adopting a model of neutrality comparable to Sweden in peace talks, reported the Independent on Wednesday. Russian negotiators said that Kyiv had offered to become a de-militarised state, but Ukraine responded by saying that it needs “legally verified security guarantees” and would not accept any other model.

A Ukrainian official said on Wednesday that negotiations have not yet progressed significantly and that the more positive tone from Russia was more about Moscow wanting sanctions pressure eased, reported Bloomberg's Annmarie Hordern. She quoted the official as referring to Russia's tone as a "smoke curtain".

Russian President Vladimir Putin on Wednesday reiterated that he had no other option for the security of Russia than conducting the special military operation in Ukraine, reported Reuters. Ukraine could have had nuclear weapons in the foreseeable future and, backed up by Western powers, was planning aggression against Russia, Putin stated. We do not want to occupy Ukraine, he added and criticised Western media for failing to report on the attacks made by Ukraine in the Donbas region.

All of our tasks in Ukraine will be achieved and the operation is going to plan, Putin said, though he added that Russia is ready for talks. Putin said that Western powers who want to create "anti-Russia" sentiment do not are about the Ukrainian people.

Putin noted that Western countries face rising energy costs and that these problems will only increase. Who will answer for the millions of deaths in poorer countries, Putin asked. Putin said that the US and EU have effectively declared default onto Russia and that the arrest of Russia assets abroad is a lesson for Russian businesses.

EUR/USD has cooled down to around 1.10 after Kyiv reportedly rejected Russia's neutrality demands. Earlier, the pair leaped significantly above 1.10 in response to reports about a tentative 15-point peace plan. The safe-haven dollar is rocking and rolling.

GBP/USD has slipped back to around 1.31 as hopes for a Russian-Ukrainian deal fade. Earlier, investors ditched the dollar in response to reports of a peace plan. Traders are eyeing the Fed's first post-pandemic hike due out later.

Gold staged a rebound and advanced toward $1,930 earlier in the day but lost its traction. The 10-year US Treasury bond yield is up more than 1% on the day ahead of the Fed's policy announcements, weighing on the yellow metal.

USD/JPY was seen consolidating its recent strong gains to the highest level since January 2017. The heavy intraday USD selling capped the upside amid extremely overbought conditions. The risk-on undermined the safe-haven JPY and extended support amid elevated US bond yields. The market focus remains glued to the outcome of a two-day FOMC monetary policy meeting.

The Australian dollar rallies ahead of the second Federal Reserve monetary policy meeting, amid an improvement in talks between Russia-Ukraine, and a worse than expected US Retail Sales report. At the time of writing, the AUD/USD is trading at 0.7253.

NZD/USD steps back to 0.6770 during early Wednesday morning in Asia, following a failed attempt to cross the 0.6800 during the previous day’s rebound.The kiwi pair’s recovery on Tuesday could be linked to the cautious optimism over Ukraine-Russia talks, as well as strong data from China.

The USD/CAD pair continued losing ground through the early North American session and dropped to a one-and-half-week low, around the 1.2685 area following the release of Canadian/US macro data.

Bitcoin (BTC) price action is performing a countercyclical move this morning as Asian bulls storm out of the gate on positive-speak from the Chinese government. From now on into the European session, gains are still present but have faded slightly. Expect to see a subsequent round of wins coming in during the US session and going further into this week as long as positive signals are communicated independently from both sides in Ukraine and Russia peace talks.

Bitcoin price action seems to have awakened many investors who fell asleep staring at their television screen for the past three weeks on the Russian invasion of Ukraine. As they pulled out their money and went long cash, cryptocurrencies dried up a bit and were left to the mercy of bears. Today a few bears will be licking their wounds as bulls have gone in for a push higher as more positive signals come from both Ukraine and Russia on talks, and markets are getting used to the war headlines as everything looks to be priced in.