The losses extended to cryptocurrencies, with Bitcoin suffering its steepest ever one-day collapse.
08:01pm
Anthropic’s Claude Opus 4.6 model has been designed to conduct financial research.
The news comes soon after the start-up’s new tool, called “plugins”, which can be used to work in in legal, marketing, finance, data analysis or customer support, drove a sell-off in software companies.
According to Anthropic, the new bot has the ability to run financial analyses, do research, and use and create documents, spreadsheets, and presentations.
Shares in a number of financial services firms declined after the launch was announced, with FactSet Research Systems, Nasdaq and S&P Global all down.
07:08pm
Anthropic has launched a new Claude bot amid a tech sell-off sparked by worries about the start-up’s impact on the work of traditional providers and professional services firms.
The California-based company revealed Claude Opus 4.6 on Thursday, a model described by the group as improving “on its predecessor’s coding skills”.
The announcement comes soon after Anthropic unveiled a new service that lets users automate tasks in sectors ranging from finance and law to marketing and data analysis, a move that panicked traders.
Anthropic called the new model “much more capable for everyday work”.
06:37pm
A sell-off in cryptocurrencies that accompanies a decline in tech stocks has intensified.
Bitcoin has fallen 11pc to less than $66,000, reversing all of the gains the digital currency made since Donald Trump was elected president.
Ether, the world’s second biggest cryptocurrency, shed more than 10pc.
06:32pm
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At Anthropic, the artificial intelligence (AI) business behind the Claude co-working bot, staff are increasingly uneasy about the power of their own creation.
In response to an internal survey in December, one Anthropic employee frets: “In the long term, I think AI will end up doing everything and make me and many others irrelevant.”
Another says: “It kind of feels like I’m coming to work every day to put myself out of a job.”
06:18pm
US stocks have fallen as investors respond to the latest employment data and a continued sell-off in tech shares.
The S&P 500 and the Dow Jones Industrial Average both declined 0.8pc after it was revealed that there were 108,000 job cuts in January, the largest amount in the first month of the year since 2009.
The tech-heavy Nasdaq Composite shed just over 1pc as concerns grew about the impact of artificial intelligence on software companies and professional services firms.
05:55pm
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Andrew Bailey has been accused of stifling growth and hurting taxpayers by keeping interest rates on hold against a backdrop of slowing growth and rising unemployment.
Economists warned that Bank of England officials were adding “unnecessary strain” to the economy as officials held rates at 3.75pc on Thursday in a knife-edge decision that saw the Governor cast the deciding vote.
The Institute for Public Policy Research (IPPR), a Left-leaning think tank with links to the Labour Party, said policymakers had “missed an opportunity” to cut rates, accusing them of bowing to “statistical noise” after the recent jump in inflation.
05:52pm
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The Bank of England Governor said he was “shocked” by Lord Mandelson’s ties to Jeffrey Epstein and the “cover-up” which followed amid mounting pressure on Sir Keir Starmer.
Andrew Bailey on Thursday said the disgraced peer’s ties to the convicted child sex offender and his leak of confidential information during the financial crisis posed serious questions for the political establishment.
Mr Bailey said: “I am shocked by what we now learn about what went on during the financial crisis period.
“I don’t want to sound pious, but this is for all of us: how is it that we live in a society in which this happened, and the cover-up happened as well.”
He added: “Those are questions that we all have to ask. I think that is a very fundamental question that we have to ask ourselves.”
04:53pm
UK and European stocks have declined as investors digest the latest interest rate decisions by the Bank of England and the European Central Bank.
The FTSE 100 fell close to 1pc to 10,309 points after Andrew Bailey said the central bank was holding rates at 3.75pc.
Meanwhile, France’s Cac slipped 0.3pc and Germany’s Dax shed almost 0.5pc at the closing bell.
04:48pm
Markets indicating a 50:50 chance of an interest rate cut by the Bank of England in March is “not a bad place to be”, Andrew Bailey said.
The Governor of the Bank of England told Bloomberg: “I think going into March, 50:50 is not a bad place to be … In a sense, markets are asking themselves the same question that I’m asking, or perhaps they’re just working out what question I’m asking.”
04:37pm
Andrew Bailey said there is “some scope for further reductions” in interest rates.
The Governor of the Bank of England told Sky News: “I don’t think we need to see everything falling into place, because monetary policy has to look forwards.”
He added that there is “some scope for further reductions”.
Mr Bailey explained that the point is being reached where interest rates may get to what he calls their “neutral setting”, meaning if there are no more economic shocks, they would help to hold inflation at the 2pc target.
“We don’t know what that level is” but as rates are reduced it’s a matter of “iron logic” that we’re getting nearer, he said.
04:05pm
Bitcoin has declined as cryptocurrencies have fallen victim to a significant sell-off in shares in technology companies.
The world’s largest cryptocurrency fell 9pc to under $68,000, reversing gains made following Donald Trump’s inauguration in January.
It marks the coin’s lowest drop since October 2024.
Ether and Solana also plunged 9pc.
03:55pm
Deutsche Bank is forecasting two rates cuts this year, with one in March and another in June.
Sanjay Raja, of the banking giant, said: “We continue to think that further rate cuts are coming.
“We stick to our call for the next Bank Rate cut to come in March and a final rate cut to come in June taking Bank Rate to 3.25% – broadly consistent with our estimate of neutral.
“What do we need to see for a Q1-26 rate cut? Data coming broadly in line with the Bank’s projections.
“Risks are still skewed to a slower pace of rate cuts. But we remain confident that Bank Rate will be cut twice this year.”
03:33pm
The next interest rate cut by the Bank of England looks like “a question of when, not if”, AJ Bell said.
Laith Khalaf, of the investment platform, wrote in a note: “The Bank of England has chosen to hold interest rates at 3.75%, but it was a much closer call than anticipated, with four members of the committee voting to cut.
“That’s a far more dovish result than was expected, especially when you consider that Andrew Bailey and Catherine L Mann voted to hold, but sound like they are close to nodding through a cut too.
“This will shift enormous focus onto the March meeting, where just one more policy maker voting for a cut could make it a reality.
“In the meantime, incoming labour market and inflation data could shift markets if it looks like providing more justification for cutting rates.
“In short, it looks like a rate cut is now a question of when, not if.”
03:28pm
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Drivers are buying fewer cars thanks to the Government’s zero emission vehicles (ZEV) mandate, the Bank of England has found.
“The automotive market remains in difficulty, with manufacturers having to restrict sales of conventional cars to meet electric vehicle targets, which in turn is leading to consumers keeping cars for longer or choosing used cars over new,” said its agents’ report.
Housebuilders are also struggling as the Government has not yet succeeded in its quest to cut back planning rules and boost construction.
“Contacts report that new-build housing activity has stalled, held back by weak demand, elevated build and funding costs and persistent planning delays,” the report said.
03:10pm
European Central Bank president Christine Lagarde has reiterated that the ECB was still “in a good place” on monetary policy.
This has fuelled expectations of a potentially long spell of unchanged interest rates in the 21-country eurozone, possibly extending into 2027.
Ms Lagarde told reporters in Frankfurt that the risks to inflation and economic growth were “broadly balanced”.
Eurozone growth could be hit by tariffs and supply-chain disruption, or by ructions in financial markets, she said. But it could be boosted by government spending on defence and infrastructure, or by businesses rapidly adopting new technology.
Inflation could be fuelled by supply chain-disruption, but could ease if the strong euro reduced import prices.
Ms Lagarde would not be drawn on whether there was more upside or downside risk to prices and economic growth.
“When I think of geopolitical risks, it’s ebb and flow. When I look at uncertainty about tariffs, it’s up and down, out and back. This has been going on for quite a few quarters,” she said.
She said the ECB would make interest rate decisions based on the flow of data, and was not committed either to cutting or raising rates. She did not offer any “forward guidance” on where rates might head next.
Many economists have reacted to today’s decision with a prediction that the ECB’s next move, if and when it comes, is more likely to be a rate cut than a rate increase. This is because inflation has dropped below the bank’s 2pc target.
03:04pm
The Bank of England said companies were slowing down the pace of price rises in its latest survey of finance chiefs in UK businesses.
It said bosses were planning to raise prices by 3.4pc in January compared to the previous year, dwon from 3.5pc in the 12 months to December.
Their expectations for inflation in the year ahead fell to 2.9pc last months, down from 3.2pc in December.
Rob Wood, chief UK economist at Pantheon Macroeconomics, said signs of a slowdown in wage growth, inflation and inflation expectations “will be music to the ears” of members on the MPC favouring rate cuts.
He said the data likely means the Bank of England will cut rates in March, rather than April, although he thinks there will be only one interest rate cut this year.
Mr Wood said: “Governor Bailey sounds like he wants to cut twice, but we think the data will prove too stubborn to allow that.”
02:52pm
The Bank of England will cut rates three times this year, a German private lender said after the “much closer” than expected vote to keep borrowing costs on hold.
Berenberg predicted inflation would remain close to the 2pc target from the second quarter of this year onwards.
Senior UK economist Andrew Wishart said the next meeting in March “may be too soon for the next cut”,
He said: “However, it will be difficult for spending and activity to maintain momentum amid fiscal consolidation and a deceleration in household income growth.
“Meanwhile, growing competition between a rising pool of jobseekers battling for few available roles will likely cause wage inflation to slow more sharply than the forward-looking surveys predict.”
02:42pm
European Central Bank president Christine Lagarde has welcomed Donald Trump’s nomination of Kevin Warsh to lead the US Federal Reserve.
She told reporters in Frankfurt she had known Mr Warsh for “a long, long time”, dating back to the 2007-08 financial crisis when he was a Fed governor and she was France’s finance minister.
“We go back a long way and I very much welcome the announcement of his appointment,” she said.
Ms Lagarde was one of the signatories to a 13 January statement by more than a dozen central bank chiefs, made in support of current Fed chairman Jerome Powell after attacks from Mr Trump. The letter championed central bank independence and said Mr Powell had “served with integrity”.
02:39pm
Wall Street’s main indexes ⁠opened lower amid growing concerns that technology companies have become overvalued.
The ⁠S&P 500 lost 63.21 points, or 0.9pc, ​to 6,819.51 and the Nasdaq Composite ⁠lost ​314.28 points, or ⁠1.4pc, to 22,590.30.
It came as investors fretted over Alphabet’s spending plans and Qualcomm’s downbeat forecast.
The Dow Jones Industrial Average fell 324.80 points, or 0.7pc, to 49,176.50.
02:15pm
Andrew Bailey has been accused of adding “unnecessary strain to the economy” after the Bank of England voted by the thinnest of margins to leave interest rates on hold.
The left-leaning think tank IPPR said policymakers had “missed an opportunity today to cut rates”, accusing them of listening to “statistical noise” after the recent jump in inflation.
The Monetary Policy Committee (MPC) decided by five votes to four to keep the Bank Rate at 3.75pc after inflation rose for the first time in five months to 3.4pc in December.
However, the MPC acknowledged inflation would fall to its 2pc target by the spring as a result of cuts to energy bills and freezes to rail fares announced by Chancellor Rachel Reeves in the Budget.
Governor Andrew Bailey said he thought that “there should be scope for some further reduction in Bank Rate this year”. His casting vote could have swung the committee to voting for a cut today.
William Ellis, senior economist at IPPR, said: “The Bank of England missed an opportunity today to cut rates and stop active gilt sales. This decision adds unnecessary strain to the economy, borrowing costs and the taxpayer.
“Higher than expected inflation in December largely reflected statistical noise and temporary factors.
“With core inflation stable, the bigger picture is still one of easing price pressures, slower wage growth and rising unemployment – yet the Bank of England’s stance is restricting growth.
“The Bank also note that measures introduced by the government in the recent Budget will help to reduce inflation and hit the 2pc target a year earlier than originally expected. This should encourage the Bank to act more boldly and more quickly.”
01:58pm
Andrew Bailey said what happened in the economy was “much more important” on the outlook for interest rates than any potential Labour leadership challenge.
The Governor said he would not comment directly about politics as Sir Keir Starmer faces pressure over his decision to make Lord Mandelson his US ambassador, despite being aware of his links to Jeffrey Epstein.
The Prime Minister has apologised for the appointment.
Asked whether the biggest risk to growth and stability was the Labour leadership turmoil, Mr Bailey said the Bank’s projections on inflation was being “driven by underlying economic developments”.
He said: “Whatever happens in politics, and I am not going to comment on that for obvious reasons, what is much more important here is what goes on in the underlying economy.”
01:40pm
The ECB has offered a vote of confidence in the strength of the 21-country eurozone economy, but with the caveat that “geopolitics” could still blow the bloc off course.
“The economy remains resilient in a challenging global environment,” the ECB said in a short statement accompany its decision on interest rates.
The bank said low unemployment, and higher government spending on defence and infrastructure, would bolster growth.
But it also warned that “the outlook is still uncertain, owing particularly to ongoing global trade policy uncertainty and geopolitical tensions”.
01:35pm
Andrew Bailey welcomed Donald Trump’s choice of former Federal Reserve Governor Kevin Warsh to head the US central bank when Jerome Powell’s leadership term ends in May.
“I welcome the nomination of Kevin Warsh,” the Governor told a press conference at the Bank of England.
“This is ⁠not a Jay (Powell) versus Kevin thing …I know ​both of them very well. They’re ⁠both very ​qualified.”
01:28pm
The ECB has signalled its readiness to combat any market meltdown.
The Governing Council said it stands ready to adjust all of its instruments within its mandate to ensure that inflation stabilises at its 2pc target in the medium term.
It said it would also act to preserve the smooth transmission of monetary policy into the wider economy, including to address “disorderly market dynamics”.
It said: “Moreover, the Transmission Protection Instrument is available to counter unwarranted, disorderly market dynamics that pose a serious threat to the transmission of monetary policy across all euro area countries, thus allowing the Governing Council to more effectively deliver on its price stability mandate.”
01:22pm
Andrew Bailey said he was “shocked” about recent revelations regarding former business secretary Lord Peter Mandelson, including claims he sent market-sensitive government information to Jeffrey Epstein whilst a Cabinet minister.
The Governor said: “I am shocked by what we are hearing.
“A year ago I had to give evidence in a legal case around this issue – it was my duty.
“I was having to push back on the lies we were being told consistently.
“I am shocked by what we heard at that time about the financial crisis period.
“We have to remember that the most important thing is the victims in all of this.”
01:18pm
The European Central Bank left its benchmark interest rate unchanged at 2pc for the fifth time in a row.
The ECB has made eight quarter-point cuts since it kicked off an easing cycle in mid-2024.
Since the ECB stopped cutting the rate last July, bank boss Christine Lagarde has frequently described monetary policy in the 21-country eurozone as being “in a good place”.
Inflation dropped to 1.7pc in January, and has been at or near the bank’s 2pc target for the past 12 months.
The eurozone’s economy is neither overheating nor tanking: it grew 0.3pc in the fourth quarter, for an annual rate of 1.3pc.
Although growth in Germany is still sluggish, economies such as Spain, Poland and Greece are still expanding.
“With inflation broadly at target, growth running close to trend, and labour markets still solid, the ECB has little reason to adjust policy at this stage,” said Konstantin Veit from fund manager Pimco.
01:14pm
The Governor of the Bank of England has indicated he wants to see a more “sustainable” reduction in inflation before opting for another interest rate cut.
Andrew Bailey told a press conference: “Inflation does dip below target in the central case but it is only a small dip.
“We need to see this pattern emerge and more evidence, in my view, that we will have a sustainable return to target and that is more of an issue of underlying inflation.
“Just as last year, we had what we tended to call the hump. We have to be very focused on the underlying story.”
01:11pm
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The Chancellor’s plans to cut energy bills and freeze some rail fares should pull inflation down by as much as half a percentage point in the coming months, according to the Bank of England.
That should help bring inflation back towards its 2pc target in the spring, though for reasons of policy, not solely because of conditions in the wider economy, nor because the Bank has successfully vanquished price pressures.
Other tax changes are pushing the other way. When fuel duty rises next year and taxes on electric vehicles increase in 2028, the net effect of the Budget’s policy measures will be to add 0.1 percentage points to inflation in those years.
This is one of the reasons interest rates may still not fall sharply even if inflation hits 2pc in April.
Megan Greene, a hawkish member of the MPC who voted to hold rates, said she remains to be convinced that inflation will fall sustainably.
“I would prefer to wait and see that firms and households revise down their inflation expectations in response to lower realised inflation,” she said, warning that it would be dangerous to cut rates too soon only to find that price rises have not been conquered.
12:58pm
The cost of short-term government borrowing plunged in afternoon trading after the Bank of England signalled rate cuts were on the way.
The yield on two-year UK government bonds, known as gilts, sank by nearly nine basis points to 3.61pc, having been flat on the day before the Bank’s announcement.
At the other end of the scale, the 30-year yield was flat after earlier rising sharply over fears Sir Keir Starmer was on the verge of being replaced by a new left-leaning Labour leader.
12:52pm
Four members of the Monetary Policy Committee voted for a rate cut to 3.5pc to combat the risk of rising unemployment.
Bank of England staff noted that young people had borne the brunt of recent increases in unemployment, which it said was usually a leading indicator for wider job losses.
“These developments could be signalling a greater-than-anticipated weakening in labour demand,” the Bank warned, adding that history suggested that unemployment tended to “rise quickly” during turning points in the economy.
The gloomy outlook prompted four of the Monetary Policy Committee’s (MPC’s) nine members to vote for an immediate rate cut to 3.5pc, including two of its deputy governors.
However, concerns about the outlook for wages saw the majority vote to keep interest rates on hold, with pay growth, particularly in the public sector, remaining stubbornly high.
In a split 5-4 vote, policymakers said they were looking for further evidence for easing wage growth. The bulk of pay deals in the UK are negotiated by April.
12:44pm
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Growth in the private sector has ground to a halt even as the public sector is booming, according to the Bank of England.
Output in the market sector has barely budged through 2025, and has grown by around 2.5pc since the end of 2023.
By contrast public sector output has boomed, rising by close to 5.5pc over the same period.
It comes amid ballooning public spending, combined with rising taxes and borrowing.
Public sector headcount is rising, with average earnings among those who work for the state jumping 7.9pc in the past year.
Private sector wages are up by less than 4pc, a rate which is set to slow further.
More companies are also holding off hiring, with around 45pc seeking to shrink their workforces to cover the cost of National Insurance Contributions, the rising minimum wage and extra regulation.
That is up from below 30pc who said they would cut workers as a result of the policies last year.
12:35pm
The Bank of England has downgraded its growth forecasts for the next two years and warned the economy was now in danger of a sharp jump in unemployment.
Officials voted to keep interest rates on hold at 3.75pc in a split decision that saw governor Andrew Bailey cast the deciding vote.
In its first evaluation of the economy since the Budget, Threadneedle Street Rachel Reeves’s decision to cut energy bills by an average of £134 would help to bring inflation back to its 2pc target by the Spring.
Mr Bailey said this “good news” suggested policymakers would cut rates further in the coming months to support the economy.
However, staff warned that unemployment was likely to be higher over the next three years, blaming the Chancellor’s repeated tax raids as well as inflation-busting increases in the minimum wage.
It said underlying growth in employment had been “zero” over the past year “due to cost pressures from higher employer national insurance contributions and the national living wage.”
As a result, the Bank cut its growth forecasts for this year to just 0.9pc, down from a prediction of 1.2pc last November, adding that cautious consumers were choosing to save rather than spend.
Growth in 2027 is expected to rise to 1.5pc, down from a prediction of 1.6pc last year.
While it expects growth to pick up in 2028, it said Ms Reeves’s backloaded tax rises, including a stealth raid on incomes would continue to weigh on growth for the rest of the parliament. “The freeze in income tax thresholds will limit the support to household spending,” it said on Thursday.
The Bank warned there was a growing risk of a sharper jump in unemployment as it warned the jobless rate was now likely to peak at 5.3pc.
It said there was growing evidence that redundancies were rising with more businesses choosing to slash staff than anticipated a year ago.
12:31pm
Traders raced to increase their bets on cuts to interest rates this year after the latest comments by Andrew Bailey.
Money markets indicate there is a 59pc chance of a rate cut in March, up from just a 21pc chance before the Bank of England’s latest rate decision was announced.
A rate cut is priced in by April, with traders forecasting an 83pc chance of a second reduction in borrowing costs by the end of the year.
The chances of two cuts were around 50/50 before it emerged that the MPC voted to hold rates by the thinnest of margins.
12:25pm
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Britain’s workers face years of mediocre growth in living standards as higher taxes eat away at the value of pay rises.
The average worker can expect wages to rise by around 3pc per year, the Bank of England predicts.
But with prices predicted to rise at around 2pc per year and taxes rising, with the extension of the long freeze on income tax thresholds, families will feel little benefit from bigger pay packets.
Real post-tax earnings rose by 1.8pc last year, not the 2.8pc the Bank previously forecast.
And it expects things to get worse: growth in workers’ spending power will slow sharply to 0.6pc this year, 0.3pc in 2027 and 0.9pc in 2028.
The result is that families will need to cut back saving to fund any serious rise in their spending power.
Officials expect households to put less money aside, but if they continue saving diligently, then the economy will slow further.
12:21pm
The pound fell sharply after the Governor of the Bank of England suggested there would be more interest rate cuts this year.
Sterling dropped by 0.6pc against the dollar to $1.357 after Andrew Bailey said “there should be scope for some further reduction in Bank Rate this year”.
The pound was down 0.6poc versus the euro, which was worth nearly 87p.
Lindsay James, an analyst at Quilter, said the MPC’s decision to hold rates firm by five votes to four was “a much closer split than had been expected”.
He said: “Markets are now likely to price in more than the one to two rate cuts expected ahead of this announcement, with earlier assumptions that rates will be nearing their trough by year end potentially called into question. But as ever, much will depend on any surprises in the data.”
12:15pm
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The nine members of the MPC are split into three distinct groups.
The doves are the four policymakers who voted to cut rates: Sarah Breeden, Swati Dhingra, Sir Dave Ramsden and Alan Taylor.
Falling inflation and rising unemployment convinced this group to back a move from 3.75pc to 3.5pc.
At the other end of the spectrum are the ardent hawks, Megan Greene, Clare Lombardelli and chief economist Huw Pill.
Ms Lombardelli worries that wages are still rising fast despite higher unemployment, and so might not bring down inflation. Mr Pill says interest rates have been cut too quickly since August 2024, meaning price pressures “still need to be contained and eliminated”.
These three won the vote to keep rates at 3.75pc because they were backed – this time – by the more centrist Catherine Mann and Andrew Bailey, the Governor.
They expect lower inflation in the coming months will help reduce demands for higher prices, from companies, and higher pay, from workers, helping to sustain that drop in inflation.
But they want more evidence before cutting again.
“Overall, the risks from inflation persistence appear to have continued to reduce,” says Mr Bailey.
“I therefore see scope for some further easing of policy. This does not mean that I expect to cut Bank Rate at any particular meeting. I will go into the coming meetings asking whether a cut is justified.”
12:11pm
Policymakers said the risk of persistent inflation had become “less pronounced” as they opted to hold rates at 3.75pc.
The Monetary Policy Committee justified its decision to leave borrowing costs unchanged by saying “risks to inflation from weaker demand and a loosening labour market remain”.
It added: “On the basis of the current evidence, Bank Rate is likely to be reduced further. Judgements around further policy easing will become a closer call.”
12:08pm
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Rachel Reeves’s Budget will boost the economy in the short term as the Chancellor ramps up benefits spending, the Bank of England has predicted.
But her tax raids will whack growth further into the future, as the extension to the long freeze on income tax thresholds hits workers’ incomes.
Officials predict that rising welfare and extra investment spending will add as much as 0.3pc to GDP in 2027-28.
But the drag from higher taxes will shave the same amount off the economy by the end of the decade, with the net effect of rising taxes and spending resulting in a loss of almost 0.2pc off GDP.
12:03pm
Policymakers at the Bank of England voted by the thinnest of margins to keep rates on hold.
The Monetary Policy Committee was split by five votes to four in favour of leaving rates at 3.75pc.
Andrew Bailey, Governor of the Bank of England, said: “We now think that inflation will fall back to around 2pc by the spring. That’s good news.
“We need to make sure that inflation stays there, so we’ve held rates unchanged at 3.75pc today.
“All going well, there should be scope for some further reduction in Bank Rate this year.”
12:00pm
The Bank of England has kept interest rates on hold at 3.75pc after the recent jump in inflation but signalled more reductions in borrowing costs were on the way.
Members of the Monetary Policy Committee (MPC) voted by a margin of five votes to four to hold borrowing costs steady after reducing rates four times last year.
It comes after inflation rose for the first time in five months during December to 3.4pc.
Policymakers left borrowing costs unchanged despite the jobs market showing signs of weakening, with unemployment stuck at a four-year high of 5.1pc.
11:43am
A fund manager said he thinks the Bank of England will cut interest rates “at least once more time, possibly more this year”.
Matthias Scheiber, senior portfolio manager at Allspring Global Investments, said he thinks rates will be held at 3.75pc today.
He said: “Faster than expected cooling in inflation is offset by stubbornly high wage growth while economic growth seems to have picked up again.
“Inflation is expected to fall back to 2pc in spring because of the cost-of-living measures announced by the Government. We still expect the Bank of England to cut interest rates at least one more time, possibly more this year.
“This should ease the burden on mortgage payments, and the housing market has lately shown signs of recovery.”
11:30am
The European Central Bank also announces its latest interest rate decision later, although it is not expected to announce any cuts in the near future.
The eurozone central bank has held rates at 2pc since June last year after inflation fell back to the bloc’s target.
Andrzej Szczepaniak, an analyst at Nomura, said he expects its next move to be an increase rather than a cut, although he expects rates to “remain on hold for the foreseeable future”.
He said he expects unemployment in the eurozone to fall further, “adding to wage growth and inflationary pressures”.
He predicted at least two quarter point increases in rates in 2028 to “bring inflation back to target”.
10:51am
Britain’s biggest lenders are raising mortgage rates amid expectations of fewer interest rate cuts this year, writes Zachariah Sharif.
Barclays announced increases of up to 0.15 percentage points will take effect from Thursday, joining HSBC, Nationwide, Virgin Money and Santander, which all raised rates earlier this week.
It came as swap rates, the main pricing mechanism for fixed mortgages, continued to rise as investors priced in fewer rate cuts ahead of the Bank of England’s vote on Thursday. Economists widely expect it to hold the base rate at 3.75pc.
10:28am
The cost of UK government borrowing was rising at the fastest pace in Europe as pressure grows on Sir Keir Starmer over the Lord Mandelson scandal.
The yield on 30-year UK gilts, as UK bonds are known, jumped at three times the pace of those for comparable economies as bookmakers made the Prime Minister odds-on to leave No 10 this year.
UK borrowing costs rose amid concerns from bond investors that Sir Keir’s departure would open the door to a more Left-leaning Prime Minister who would ramp up spending and debt levels.
James Athey, a fund manager at Marlborough Group, said: “The fear of course is that Rayner or Burnham still have routes to Number 10 and both of them would be received very badly indeed by gilt investors.”
The 30-year gilt yield was up more than six basis points to 5.39pc, compared to rises of less than two basis points in France, Germany, Spain and Portugal.
09:50am
The FTSE 100 was lower after a sharp sell-off in technology stocks and fresh turmoil in the metals market.
The UK’s benchmark index was down 0.5pc ahead of the Bank of England’s rate decision, with the domestically focused FTSE 250 down 0.7pc.
Shares fell after tech stocks plunged in the US and Asia over fears about the impact of AI and concerns about demand for microchips.
As much as $800bn (£586bn) was wiped off the Nasdaq Composite in New York on Wednesday, which was down almost 2.5pc at its worst point. The index recovered somewhat as trade went on but still closed down 1.5pc.
Meanwhile, gold and silver, which have become more volatile recently, were rocked by a fresh sell-off on Thursday, which saw silver falling as much as 16.6pc to a low of $73.41.
It sent mining stocks lower on tne FTSE 100, with Fresnillo down 3.2pc and Antofagasta and Glencore down 1.9pc.
It also helped the dollar climb for a second day to a two-week high against major currencies, including the pound.
Sim Moh Siong, an analsyt at OCBC, said: “There’s a bit of risk aversion coming through.
“When there’s risk aversion, the dollar tends to strengthen.”
09:24am
Bond markets are increasingly at risk of a worldwide meltdown after hedge funds piled a record £2.2tn into government debt, a global watchdog has warned.
The Financial Stability Board (FSB), led by Andrew Bailey, the Bank of England Governor, warned countries are dangerously exposed to the threat of fire sales in the event of economic shocks.
This could lead to a dramatic increase in global borrowing costs, potentially sparking a new financial crisis.
Mr Bailey, who took over as chairman of the financial watchdog last summer, has previously warned that the increasing role of hedge funds in the gilt market could pose a threat to the financial system.
09:04am
The cost of government borrowing was steady as the Bank of England was expected to keep rates on hold.
Shorter-term bond yields were a touch lower while yields on longer term bonds edged higher. The yield on a bond is the return that a government promises to regularly pay buyers of its debt.
The yield on 10-year UK gilts, as UK bonds are known, was up two basis points to 4.56pc, with 30-year gilts up around the same amount to 5.36pc.
Julien Lafargue, an analyst at Barclays Private Bank, said: “When it comes to forward guidance, the Bank of England is likely to remain non-committal about the timing of any future interest rate cuts.
“That said, the combination of lower inflation ahead and continued softening of the UK labour market should reinforce the central bank’s view that the path for monetary policy is towards a lower Bank rate, potentially as early as next month.”
08:45am
The value of the pound fell in the run-up to the latest interest rate decision by the Bank of England.
Sterling was down 0.3pc against the dollar at $1.362 and dropped by 0.2pc versus the euro, which was worth 86.7p.
It came as the dollar strengthened amid fresh turmoil in the metals market, where the price of silver dropped by as much as 17pc overnight.
Money markets indicate there just a 2pc chance that the Bank of England will cut rates later today.
However, traders are betting there is a 72pc chance of borrowing costs being lowered by April.
The market indicates it is likely there is around a 50pc chance of another cut after that by the end of the year.
08:28am
Interest rates will remain on hold after data indicated stronger “stickier inflation than we had expected”, an economist said.
Andrew Wishart of German private bank Berenberg said underlying inflation would be “above target-consistent levels in the near term”, which had ruled out a February rate cut.
He said rates would also stay on hold after “indications that the UK economy made a strong start to 2026”.
He pointed to figures on private sector activity hitting a two and a half year high in January.
As a result, Berenberg increased its UK GDP forecast for this year to 0.9pc from 0.7pc at the start of the year, although he warned this meant stronger inflation.
“In time, fiscal tightening and decelerating pay growth will snuff out excess price pressures, but not as soon as we anticipated before,” he said.
He forecast the Bank to cut rates in April, with two more cuts later this year to 3pc.
08:08am
The FTSE 100 fell at the start of trading as economists predicted the Bank of England would leave interest rates unchanged at 3.75pc later.
The UK’s flagship stock index was down 0.4pc to 10,359.07 while the mid-cap FTSE 250 dropped by 0.3pc to 23,232.41.
07:44am
The Bank of England faces a “delicate balancing act” between supporting growth and fuelling inflation, an economist warned.
Policymakers on the Monetary Policy Committee will likely be encouraged by rising unemployment, which indicates the jobs market is slowing down and less of a threat to inflation.
However, the most recent official data also showed rising wages, with public sector pay growth up at its fastest rate on record. Rising pay risks fuelling inflation.
Meanwhile, inflation rose to 3.4pc in December.
Edward Allenby, senior economic adviser at Oxford Economics, said: “The MPC will continue to face a delicate balancing act between supporting growth and preventing inflation from becoming entrenched, with forthcoming data on pay settlements likely to play a decisive role in shaping the next policy move.”
07:27am
Thanks for joining me. The Bank of England is expected to keep interest rates on hold at 3.75pc later today. However, Deutsche Bank is predicting it will lower its near term growth forecasts. Here is what you need to know.
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4) Labour leadership coup ‘risks scuppering interest rate cuts’ | A senior adviser at Oxford Economics said a further shift towards traditional Labour “tax and spend” policies would “probably reduce the likelihood of the MPC [Monetary Policy Committee] cutting rates a long way”
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Tech stocks plunged as investors worried about the impact of artificial intelligence (AI) and demand for microchips.
The latest round of jitters over high prices for tech shares sent South Korea’s Kospi down nearly 4pc, while US indexes were also lower in premarket trading. Oil prices sank more than $1 a barrel.
Bitcoin was trading near $71,000, down 7pc after crashing to about $69,000 earlier in the day, which was its lowest level since November 2024.
In share trading, Tokyo’s Nikkei 225 shed 0.9pc to 53,818.04, while the Kospi in South Korea skidded 3.9pc, to 5,163.57.
Shares in South Korea’s biggest company, Samsung, lost 5.9pc. Chip maker SK Hynix plunged 6.7pc.
Chinese markets also retreated, with Hong Kong’s Hang Seng falling 0.3pc to 26,761.00. The Shanghai Composite index gave up 0.6pc to 4,079.68.
Australia’s S&P/ASX 200 fell 0.4pc to 8,889.20, while Taiwan’s Taiex lost 1.5pc.
The tech-heavy Nasdaq Composite fell 1.5pc, while the S&P 500 shed 0.5pc. The Dow Jones Industrial Average rose 0.5pc.
finance.yahoo.com
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