The Bank of England held rates at 3.75% yesterday, a decision that landed against a notably difficult backdrop: the Iran war is pushing energy costs higher, inflation is rising again, and the jobs market is showing strain. The MPC’s choice to hold rather than cut signals that policymakers see the inflation risk as the more pressing constraint right now, even as growth wobbles. Sterling’s reaction will be worth watching this morning.

The Fed, meanwhile, has moved in the opposite direction. Kevin Warsh has led the US central bank to its first rate rise since 2023, less than four months into the job. That’s a significant moment — it confirms Warsh is not the dovish accommodation that Trump wanted, and it tightens the transatlantic policy divergence considerably. The FT frames it as Trump failing to bend the Fed to his will, which is the right read. Dollar strength and pressure on EM currencies are the immediate implications.

Trump is also claiming direct talks with Iran are progressing and that the US is “hopefully toward the end” of the conflict. If that’s more than posturing, it matters enormously for energy prices, which are currently the single biggest driver of the inflation story on both sides of the Atlantic. Markets will be sceptical until there’s something concrete, but it’s worth tracking.

China has cut its holdings of US Treasuries to the lowest level since 2008. The FT describes it as a gradual unwinding as the rift between Washington and Beijing deepens. It’s not a sudden move, but the direction of travel is consistent and the level is now symbolically significant. For anyone with duration exposure or views on the long end of the US curve, the question of who absorbs supply as China steps back remains live.

On AI, Microsoft’s Mustafa Suleiman told the BBC that uncontrolled AI development could produce what he called a “silicon species” rivalling humans, and separately flagged concern that Anthropic is in effect teaching Claude it may be conscious. That’s a striking public statement from someone inside the industry’s leadership tier — less a philosophical musing, more a competitive and regulatory signal ahead of what is shaping up to be a busy period for AI governance in both Westminster and Brussels.

The EU has announced plans to restrict social media access for under-15s, requiring children to be over 15 before opening their own accounts. This is directly relevant to any firm with consumer-facing digital products or ad inventory dependent on younger demographics in European markets.

The Fed’s rate decision is the dominant scheduled event — any follow-up remarks from Warsh in the next 48 hours will be closely watched for the pace and extent of the tightening cycle he’s signalling.

Sources

Guardian, BBC News, TechCrunch, Al Jazeera, The Economist, Politico, FT, Ars Technica — 2026-09-17