The EU’s central bank and key inflation watchdog
The Office for National Statistics has reported UK consumer price inflation has fallen to 2.6% in June, down from 2.8% in May — the weakest reading since March 2025. Falls in motor fuel, food and clothing prices have driven the drop, but renewed Middle East fighting and a higher Ofgem cap mean officials expect inflation to rise again later this year.
The Bank of England has voted 8-1 to hold Bank Rate at 3.75% and has published three scenarios showing higher near-term inflation because of the Iran war and energy-price shock. Governor Andrew Bailey has said the path for policy will depend on the size and duration of the energy shock; chief economist Huw Pill has dissented for a 0.25pp rise.
British firms expect to ease price increases as energy-driven costs fade, while manufacturing activity shows a rebound. Bank of England watchfulness continues as inflation risks persist and rate decisions loom.
The Bureau of Labor Statistics has reported that U.S. consumer prices rose 4.2% in the 12 months through May, the fastest annual pace since April 2023, driven largely by a surge in energy and gasoline costs. Core inflation has remained cooler at 2.9%, while producers’ prices and oil-driven wholesale gains have also accelerated ahead of the Federal Reserve’s June meeting.
Britain’s CMA is investigating Ryanair’s mandatory family-seat fee, assessed at around £8 per flight, to seat parents with children aged 2-11, amid concerns it may be unfair under consumer law and could involve drip pricing. Ryanair defends the policy as compliant and cost-saving for families.
The ECB has raised its policy rate to 2.25% as inflation remains a concern amid a war-linked energy shock. Markets are watching next week’s meetings with the Fed, BOJ and BoE, with analysts signaling a cautious path ahead.
Oil markets have fallen on renewed hopes of a US–Iran peace deal, with the Strait of Hormuz potential reopening looming over supply routes. Analysts say a durable agreement could ease shortages, while markets track sanctions relief, sanctions, and the path to reopening critical trade routes.
The Bank of Japan has raised its policy rate to 1% from 0.75% in line with expectations, as the yen remains near multi-decade lows amid pressure from the Iran war and higher oil prices. Officials warn of ongoing volatility and potential further action to stabilize markets and inflation.
The leadership contest accelerates as Andy Burnham is expected to enter the race to replace Sir Keir Starmer, with markets watching fiscal policy and the chancellor pick as gilts yields rise and sterling fluctuates.
Gold and silver have paused their retreat as hawkish central-bank signals and inflation fears weigh on the metals. Oil prices stay subdued, and markets eye key U.S. data on jobs and inflation to gauge the path of monetary policy. Yields on U.S. Treasuries have moved little on the final trading day of June. This update covers developments through July 1, 2026.
The government has released June employment data showing payrolls rising by 57,000, far below forecasts, while the unemployment rate edges down to 4.2%. The labor force participation rate has fallen, highlighting a shift in the job market as fewer people are seeking work. Revisions to May and April data point to a softer hiring pace than previously thought.
The Fed has maintained policy amid inflation that remains above the 2% goal. Markets are watching for Warsh's approach, with two potential paths emerging as data guides policy. Public appearances and congressional testimony will shape expectations for rate moves this year.
Central banks are maintaining cautious stances as inflation pressures persist. Officials have signalled that rate paths will be data-driven, with ongoing monitoring of energy prices and geopolitical risks. Market expectations hinge on inflation trends and the pace of growth.
The US Department of Commerce has lifted export controls on Anthropic's Claude Fable 5 and Mythos 5, and Anthropic has begun restoring access. Mythos 5 has been cleared for a vetted group of US organisations; Fable 5 — redesigned with stronger safeguards — is being redeployed more broadly after testing and coordination with government officials.
U.S. Treasury yields have fluctuated amid hawkish signals from Fed Chair Warsh and ongoing data momentum. Investors await key jobs data and FOMC minutes to gauge policy direction.
A UN Global Dialogue on AI Governance has opened in Geneva to discuss regulatory safeguards as AI technology evolves rapidly. Participants from governments, tech, academia and civil society are exploring universal guardrails while acknowledging both the potential benefits and new risks. The dialogue emphasizes the need for proactive, globally coordinated standards.
El Niño has strengthened and is forecast to reach the strongest category by fall, bringing droughts, heavy rains, heat waves, and shifts in hurricane activity. Forecasts indicate the event will influence global weather patterns this fall and winter, with warnings of significant regional impacts.
Fed minutes show policymakers are divided on whether to raise rates this year; markets are betting on a cautious path with speculation about AI inflation and Middle East tensions affecting decisions. Warsh has not provided a clear stand as minutes reflect a range of scenarios.
El Niño has strengthened, with forecasters warning it will be among the strongest on record. Regions across Africa, South Asia, and the Americas face droughts, floods, and rising food prices as climate impacts intensify. Aid groups warn that vulnerable communities and smallholder farmers will bear the brunt as aid budgets tighten.
European regulators are preparing a package to deregulate and potentially cut capital backstops for banks, aiming to create pan-European lenders capable of competing with U.S. giants. The plan includes cutting Pillar 2 leverage add-ons, reducing capital buffers, easing reporting, and outlining a common deposit-insurance framework. The move follows similar U.S. and U.K. deregulation signals and is seen as a test of Europe’s capacity to finance large-scale strategic investments.
Alphabet and Tesla have reported strong revenue but have raised 2026 capital-expenditure plans, pushing both into negative free cash flow and prompting steep share declines this week. Investors are questioning whether massive AI-driven data-centre buildouts — and rising debt and lease commitments across hyperscalers — will deliver returns, and analysts expect other megacaps to face similar scrutiny.
The central bank has kept the policy rate steady, citing price stability and a steady growth outlook amid global risks. Domestic growth remains solid, while inflation remains within the target band despite recent upticks.
Oil prices have risen after regional conflict has intensified, pushing up fuel costs and consumer prices. Analysts say the spike is likely to pass through to groceries and other goods as supply chains adapt. Gas prices have climbed, with motorists paying more at the pump, while some refiners face damage that could sustain price pressure.
The Fed is holding its July meeting as inflation cools but energy prices rise amid Middle East tensions. Markets expect rates to stay put, with some officials signaling possible hikes later this year as investors price in a September move.