Markets have trimmed bets on the European Central Bank, now pricing a cumulative three rate hikes by end-2027.

ECB President LAGARDE said she does not rule out leaving office several months before her ECB term ends.

Bank of England governor Bailey warned AI could trigger financial-market shocks and said the Bank is watching large capital flows into AI very closely. Asked whether an AI bubble could burst, he said “at some point asset prices may see some degree of repricing.” He said the technology has “huge potential” to boost growth but carries significant risks, noting firms are currently priced as winners though not all will be. Bailey added a major potential benefit is that AI can speed up work that supports the MPC, but “it will not make decisions for us; it is a tool for policymakers.”