Bank of England holds interest rates at 3.75% and signals rise is possible within months
The Bank of England has kept interest rates on hold and signalled it could be forced to increase borrowing costs within the coming months as the US-Israel war on Iran threatens to drive inflation in the UK above 3%,As households brace for a surge in living costs, the Bank’s rate-setting monetary policy committee (MPC) voted unanimously to keep its base rate at the current level of 3,75% amid growing concern over the surge in energy prices triggered by the conflict,It warned that the “new shock” to the economy would lead to higher than previously expected inflation in the short term, putting further pressure on household finances already battered by a cost of living crisis,Andrew Bailey, the Bank’s governor, said: “War in the Middle East has pushed up global energy prices.
You can already see that at the petrol pump and if it lasts it will feed into higher household energy bills later in the year.“The best way to tackle this is at the source by reopening energy supply lines.We have held interest rates at 3.75% as we assess how events unfold.Whatever happens, our job is to make sure inflation gets back to its 2% target.
”Against an increasingly volatile backdrop in global markets, the Bank said it expected the Iran conflict would keep inflation in the UK above 3% this year based on current oil and gas prices,Oil prices jumped again on Thursday, with a barrel of Brent crude hitting $114, while European gas prices surged by a further 17%,Financial markets had been pricing in an almost 100% chance of a hold decision, reversing expectations before the outbreak of the war for a cut in rates amid cooling inflationary pressures, a slowdown in the jobs market and weakness in economic activity,Headline inflation had been expected to fall from 3% now to about 2% from April, partly owing to measures announced by Rachel Reeves in her autumn budget to cut household energy bills,But the Bank warned the rate would probably rise to about 3.
5% in March and stick at more than a percentage point above its 2% target throughout 2026.With consumers already feeling the pinch, Threadneedle Street said the direct impact of rising energy prices would add about 0.75 percentage points to inflation this autumn, while businesses passing on higher costs could add a further 0.25 percentage points.Some members of the MPC signalled they would have voted for a reduction in borrowing costs before the outbreak of the war, including Sarah Breeden and Dave Ramsden, two of the Bank’s deputy governors.
However, others warned borrowing costs may need to rise in response to a sustained inflation shock, including the economist Swati Dhingra, who had previously been one of the most consistent advocates for rate cuts.Economists have said a prolonged conflict and higher energy prices could have serious consequences for living standards worldwide.UK inflation reached 11.1% in late 2022, the highest level in four decades, after the energy crisis triggered by Russia’s invasion of Ukraine.Megan Greene, an external member of the committee, said in the minutes of the MPC decision that households and businesses were more likely to be more sensitive to a new inflation shock because inflation had already been above the 2% target for the best part of five years.
However, in contrast to the energy price shock in 2022 – when Russia’s war in Ukraine coincided with a surge in demand and global supply bottlenecks after the easing of Covid pandemic restrictions – the backdrop for the economy was weaker.Bailey said in the minutes of the MPC meeting: “The recent experience of high inflation may … make households and businesses more sensitive to a new inflationary shock.At the same time, the starting point for this shock is a real economy with limited pricing power.”
‘We don’t tell the car what it should do’: my ride in a self-driving taxi
Driverless ‘robotaxis’ will be accepting fares in Britain’s biggest city by the end of next year. Can they deal with London’s medieval roads, hordes of pedestrians and errant ebikers? I got in the passenger seat to find out‘I’m really excited to show you this,” says Alex Kendall, the CEO of Wayve, as he gets behind the wheel of one of the company’s electric Ford Mustangs. Then he does … nothing. The car pulls up to a junction at a busy road in King’s Cross, London, all by itself. “You can see that it’s going to control the speed, steering, brake, indicators,” he says to me – I’m in the passenger seat
Actors, musicians and writers welcome UK U-turn on AI use of copyrighted work
Actors, musicians and writers have welcomed the UK government’s decision to backtrack on plans to let AI firms use copyright-protected work without permission.Technology secretary Liz Kendall said it no longer had a “preferred option” on copyright reform, having previously supported a proposal allowing tech companies to take copyrighted work – unless rights holders opted out of the process.“We have listened,” said Kendall on Wednesday, “we have engaged extensively with creatives, AI firms, industry bodies, unions, academics and AI adopters, and that engagement has shaped our approach. This is why we can confirm today that the government no longer has a preferred option.”The proposal had triggered a backlash from Elton John, who called the government “absolute losers” over the plans
How AI is actually changing day-to-day work
Hello, and welcome to TechScape. I’m your host, Blake Montgomery, chuffed about One Battle After Another’s big win at the Oscars. This week, we’re examining how artificial intelligence is changing the everyday reality of white-collar work in the US, the roots of the current appetite for AI in war, and the United Kingdom’s phantom datacenters.As part of the Guardian’s Reworked series on AI’s effect on modern work, we published two stories this week on how specific jobs are changing: those of university professors and Amazon’s technical employees. Both groups are wrestling with profound shifts
Inside the fiery, deadly crashes involving the Tesla Cybertruck
Cybertrucks have locked passengers inside and burned so hot they’ve disintegrated drivers’ bones. Victims’ families blame what they say is the faulty design of a truck Elon Musk calls ‘apocalypse-proof’When sheriff deputies arrived at the scene of a late-night crash off a desolate Texas road in August 2024, they could see a giant pyre through heavy smoke.According to police reports detailing the events of that night, the officers tried to approach the vehicle, but the fire burned too intensely. They saw it was a Tesla Cybertruck and couldn’t see anyone inside. So they combed the surrounding area for the driver
Instagram to remove end-to-end encryption for private messages in May
Instagram will stop encrypting private messages between users from May, after enduring years of criticism from law enforcement and child safety groups over the feature.Meta quietly announced this month on its help page for Instagram and in an updated 2022 news post that end-to-end encryption would no longer be available on direct messages between users on Instagram from 8 May 2026.It means Meta will be able to see the contents of messages between all users – which so far it only could for those who did not enable encryption.The feature already appeared deactivated for Australian users, when Guardian Australia tested on Wednesday.A spokesperson for Meta said the decision to abandon encryption was due to low uptake
Subnautica 2 publisher’s CEO used ChatGPT in failed bid to avoid paying US$250m bonus to own studio head, court hears
A South Korean gaming publisher who hatched a plan using ChatGPT to remove the heads of one of its own game studios in a bid to avoid paying US$250m has been ordered by a US court to reverse the removal.The dispute stems from South Korean game developer Krafton’s acquisition of Unknown Worlds Entertainment, makers of the Subnautica video game, for $500m in 2021.Krafton agreed the studio would remain independent and that its leadership would retain operational control and could only be fired for cause, according to the ruling by vice-chancellor Lori Will of the court of chancery in Delaware.If Unknown Worlds met certain targets, Krafton would pay the studio what is known as an earnout worth up to $250m.As the studio was last year ramping up to release Subnautica 2, internal projections showed it would trigger the earnout, according to the ruling
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