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Trump’s new global tariffs kick in at 10%; Bank of England governor says March rate cut ‘open question’ – as it happened
Closing post
Time to wrap up…
Donald Trump’s new global tariffs have taken effect at 10%, even though he had threatened a higher rate of 15% over the weekend, providing “some relief” for British businesses, according to a lobby group.
After the US president suffered a defeat at the hands of the supreme court on Friday, which struck down his sweeping “liberation day” tariffs imposed last year, he angrily reacted by announcing a 10% global tariff, which he raised to 15% on Saturday in a post on his social media platform Truth Social.
The owner of Facebook has agreed to buy $60bn (£44.5bn) of artificial intelligence chips from the US semiconductor company Advanced Micro Devices despite fears over the vast sums being spent on the AI industry.
Meta, which also owns Instagram and WhatsApp, has clinched the five-year deal in which it will also buy 10% of the chip company.
AMD signed a similar pact with OpenAI last year, which was hailed as a vote of confidence in its chips and software, significantly boosting its stock price.
A recent series of chip supply agreements underscores the AI industry’s appetite for processors. Meta has separately struck a deal with AMD’s larger rival Nvidia to buy millions of AI chips.
The US stock market is rising this afternoon, as the market recovers slightly by a wave of AI jitters from a speculative warning about the impact of the technology on the world’s biggest economy.
The latest foreboding is from Citrini Research, a little-known US firm that provides insights on “transformative ‘megatrends’”. Its post on Substack, which it called a “scenario, not a prediction”, rattled investors by portraying a near-future in which autonomous AI systems – or agents – upend the entire US economy, from jobs to markets and mortgages.
Key events
Bailey says interest rate cut in March ‘open question’
Bailey has also said the interest rate cut in March is “genuinely an open question”.
He told the committee that he would need more evidence to feel confident about voting to cut borrowing costs at the MPC’s next meeting in March. He voted with a 5-4 majority to hold rates this month.
Well, we’ll see. I think at the moment I would say we’re still a little way off (from) the next meeting…. It is a genuinely open question at the moment.
Markets are now pricing in a 76% chance of a March rate cut, compared with an 80% chance last week.
Bailey says Fed nominee Warsh is ‘strong believer in central bank independence’
And back to the BoE, Bailey says that Kevin Warsh, Donald Trump’s nominee for Fed Chair, is a good pick.
I do know Kevin, I think he is a strong believer in central bank independence.
Turning to the US, the stock market has opened a bit higher today. The blue chip S&P 500 index has risen by 0.4%, while the tech heavy Nasdaq is up 0.3%.
MPs to gather information for possible inquiry into trade envoys
Alex Daniel
A committee of MPs has stopped short of launching an inquiry into the role of UK trade envoys linked to Andrew Mountbatten-Windsor’s time in the job, to avoid undermining a police investigation into the former royal.
Instead, it will write to MPs to start gathering information on the regime so it could potentially launch an inquiry further down the line.
Mountbatten-Windsor was trade envoy from 2001 to 2011, and was arrested on suspicion of misconduct in public office last Thursday. Files released in the US appeared to show him forwarding sensitive government documents and commercial information to Jeffrey Epstein.
The cross-party business and trade committee met today to decide whether to investigate the role of trade envoys, but has decided not to.
Liam Byrne, chair of the committee, said:
“Given the gravity of the allegations, the committee is of the view that it is essential that [the] parliament that makes the law does nothing to undermine the implementation of the law.
“Nothing must now compromise the full and unimpeded process of British justice and the possibility of a fair trial, if and when charges are brought.
“The committee is therefore resolved that we should now begin gathering information immediately so that we might stand ready to launch an inquiry into the government regime of trade envoys at the moment the police and criminal justice system action has concluded.”
Insiders have said Mountbatten-Windsor personally asked ministers about getting a bigger government job on multiple occasions, despite senior figures saying he was widely regarded as a liability.
Mountbatten-Windsor has in the past denied wrongdoing in relation to Epstein.
Lower ‘hoarding of labour’ could boost productivity, Bailey says
Bailey says that the UK appears to be ahead on a number of other economies in terms of investment to improve productivity.
But I think Jim O’Neill is right on the point about this hoarding of labor, may well come through in somewhat higher productivity.
Pill adds that changes to minimum wage and national insurance have had a particular effect on the employment of young people.
I also would agree that some of the deeper structural changes, the fact that many sort of entry level jobs are being affected by AI, I think that is something that perhaps is difficult to manage.
The surveys that we see thus far talk about a lot of UK companies, taking up AI as a way of trying to improve productivity. As yet they don’t report that resulted in a large reduction in their willingness or ability to employ labour. But of course, on a forward basis, I think that remains an open question.
I also think…there are these issues, about the echo or long lasting effects coming out of Covid.
So, particularly…having your first job is an important part of being able to enter the labour market and be productive. The more difficult that is, can have very long lasting effects. And they do cross with things like health issues, mental health issues and so forth.”
Huw Pill, who is the chief economist at the bank, touches on the state of the labour market.
I think there has been an element of shedding labour that perhaps had been hoarded, in the period, following the end of the furlough, where the labour market was very tight and the difficulties in recruitment were intense.
Bailey adds that evidence that some of this “labour hoarding” is unwinding.
There is a reduction of labour, and companies appear to be not hiring.
We are not seeing a particular uptick in redundancies.
…What we are hearing when we go around the country, is just not hiring.
…There is an element to responding to the cost of employment.
Inflation at 2% “pretty much baked in” for the spring, Bailey says
Bailey says that the Bank’s expectations of 2% inflation in the late spring “is pretty much baked in”.
If you look at the latest number, it was pretty much exactly where we thought to was going to be.
…If you look under the lid, goods price is a bit weaker…. I think we are seeing some trade effects coming through. I think we’re probably seeing some trade effects coming through from goods pricing from China…Food prices were off a bit more than we expected. But services prices…didn’t come off as much as we thought they would.
Megan Greene, who is a member of the monetary policy committee (MPC) and has voted consistently for hold on interest rates, says she has three concerns that she would want to see addressed before she votes for a cut.
Embedded in our central forecast is a nifty handoff where we hit our inflation target sooner and wager growth and inflation expectations come off just as the impact on fiscal policy on inflation sort of flips
…I am little bit worried about that handoff not going as planned.
She says she would like to see further indications of wage growth continuing to come off, as well as inflation expectations for businesses and households.
The governor of the Bank of England, Andrew Bailey, is now appearing in front of the Treasury Committee to talk about the Bank’s decision to hold interest rates at 3.75%.
Bailey says that the bank is now expecting inflation to come back to around the 2% target “sooner than we were expecting”.
It is now “very reasonable” to expect that it will be around the target in the April number that is released in May, he says.
UK inflation slowed to 3% in January.
Matt Britzman, senior equity analyst at the broker Hargreaves Lansdown, says the Meta/AMD deal indicates the AI arms race has “shifted up another gear”.
Coming hot on the heels of Meta’s recent Nvidia agreement, the message couldn’t be clearer: AI infrastructure is priority number one. Meta is locking in supply, diversifying away from a single vendor, and doing whatever it takes to make sure its AI ambitions aren’t bottlenecked by chips.
For AMD, this is a vote of confidence in its next-generation AI hardware – but having to give up a 10% stake suggests it could be struggling to generate organic demand.
That said, delivering solutions at this scale is a new test. Designing competitive chips is one thing; manufacturing, deploying and supporting them in volumes this large is another.
…Zooming out, this deal underlines just how dominant Nvidia still is… AMD had to sweeten the agreement with a potential equity option – something you simply don’t see Nvidia needing to do to secure demand. Nvidia remains the clear top dog in AI chips, with unmatched scale, software, and customer pull. AMD is making progress and carving out a role, but with Nvidia’s results due tomorrow, we’re expecting Jensen Huang to once again remind the market who’s in charge.”
Meta 🤝 AMD
Today we’re announcing a multi-year agreement with @AMD to integrate their latest Instinct GPUs into our global infrastructure. With approximately 6GW of planned data center capacity dedicated to this deployment, we’re scaling our compute capacity to accelerate the… pic.twitter.com/a6lNWsfRci
— AI at Meta (@AIatMeta) February 24, 2026
Meta strikes multi-billion dollar chip deal with AMD
Meta has agreed a multi-billion dollar chip deal with Advanced Micro Devices, in which it could also buy a 10% stake in the business.
The company, which owns Facebook, Instagram and WhatsApp, has agreed to buy $60bn of artificial intelligence chips from AMD.
It is the latest blockbuster deal in the AI space, as companies pour billions of dollars into developing their AI tech. Meta has separately struck a deal with AMD’s larger rival Nvidia to buy millions of AI chips.
AMD will supply six gigawatts’ worth of chips to Meta, starting with one gigawatt of the company’s forthcoming MI450 flagship hardware in the second half of this year, AMD chief executive Lisa Su said.
Meta also plans to buy central processors (CPUs), including a variant that will be customised for the social media platform’s needs.
The custom CPU will be tuned to deliver powerful performance while keeping energy consumption as low as possible, Su said. The deal will include two generations of AMD’s CPUs.
Su said:
So no question Mark [Zuckerberg] is very, very ambitious in what he wants to accomplish, and we want to use every aspect of our technology to really help Meta to accomplish that.
…Meta is making a big bet on AMD.
Meta also gets a performance-based warrant as part of the deal, giving it the option to acquire up to 160 million AMD shares in tranches at an exercise price of $0.01 as it buys processors.
Shares in AMD are poised to jump when the US market opens, with the stock up 10% in pre-market trading.
The stock market looks pretty stable for now – the UK’s FTSE 100 is now only down by 0.07%, and the Stoxx Europe 600 is up slightly by 0.1%.
Futures for the US stock market were up 0.4%. Investors will be watching the US market open closely in a couple of hours, after a gloomy report on AI risks triggered a sell-off in software stocks yesterday.
The report, which was published over the weekend by the research firm Citrini, imagined a world in 2028 in which rapid advances in machine intelligence boost productivity, but could spark human job losses, weigh on consumer spending and hit stock indexes.
Shares in the tech giant IBM also suffered yesterday, although that was off the back of AI startup Anthropic saying its Claude Code tool can help modernise Cobol, an old programming language that runs on IBM computers.
UK bank stocks wobble amid credit concerns
Some of Britain’s biggest banks have been the worst performers in the FTSE 100 today: shares in Lloyds Banking Group, NatWest and Barclays are all down between 1.5-2%.
There are concerns growing around the health of the credit market, especially after Jamie Dimon, the chief executive of the American bank JPMorgan, said that there was a risk of bad loans in the banking system.
When asked about fierce competition in the financial industry, Dimon said that he was starting to see parallels with the era before the 2008 financial crisis.
He told investors:
Unfortunately, we did see this in ’05, ’06 and ’07, almost the same thing — the rising tide was lifting all boats, everyone was making a lot of money.
Adding that while JPMorgan was not willing to make riskier loans to boost net interest income, he said:
I see a couple people doing some dumb things. They’re just doing dumb things to create NII.
Kathleen Brooks, of the broker XTB, said that these fears are now being echoed across the Atlantic, but it could well be an over-reaction.
Fears about credit quality are also weighing on banks in Europe and is it is dragging the index lower. HSBC, Barclays, Lloyds and NatWest are all sharply lower today, as Dimon’s fears echo across the Atlantic. Intesa San Paolo, ING Group and Allianz are also weighing heavily on the European index. We will need to see if this sell off continues, or if a recovery in US banks helps to calm credit fears in Europe.
…It is worth noting that the default rate across European corporates was very low at 4.4% at the end of 2025, this is expected to fall this year. There were only $3.9bn of defaults in European high yield debt last year, and only $9bn in defaults in leveraged European loans.
While this could change this year, it is hopeful that it comes off a low base. Trying to guess a credit collapse might make good headlines, but it may not become a reality, and the markets could be overreacting to what Dimon had to say.
UK retail sales dampened by the rain
Heather Stewart
February’s relentlessly soggy weather depressed UK retail spending, the CBI has suggested, with volumes falling sharply, according to its monthly distributive trades survey.
The main balance on the survey slipped to -43 from -17 last month.
The CBI’s economist Martin Sartorius said:
Retail sales volumes fell at a sharp pace in the year to February, with some firms reporting that the wet weather discouraged shoppers from visiting stores.
Online shopping was up, the CBI found – but not enough to drag the overall balance into positive territory. The forward-looking indicators in the survey were more optimistic, however, with expected sales volumes for March standing at -17: the strongest reading in six months.
Rachel Reeves will deliver her spring forecast next week, and is hoping interest rate cuts from the Bank of England, and cheaper energy bills, will help to boost consumer confidence in the coming months.
China will decide on tariff retaliation in ‘due course’
China has said it will decide whether to retaliate to Trump’s latest tariffs in “due course”, a commerce ministry official said on Tuesday.
The spokesperson told Reuters:
China has consistently opposed all forms of unilateral tariff measures and urges the US side to cancel unilateral tariffs and refrain from further imposing such tariffs.
China was one of the biggest beneficiaries of the Supreme Court ruling last week against Trump’s initial raft of tariffs. Last year Beijing had retaliated against the US trade policy with multiple counter tariffs on American goods, including levies on some agricultural commodities and in energy.
Trump is expected to travel to China from 31 March to 2 April for talks with Chinese President Xi Jinping.
Oil prices hit seven-month highs ahead of US-Iran talks
Priya Bharadia
Oil prices have reached seven-month highs, as traders reacted to heightened tensions between the US and Iran ahead of nuclear talks this week.
US crude futures rose to $67.28 a barrel on Monday, while Brent crude touched its highest level since 31 July at $72.50 a barrel. Prices fell back late in the session, but were up again on Tuesday morning, approaching Monday’s highs.
James Hosie, a research analyst at Shore Capital, said oil markets were:
rationally trying to price in a risk premium for oil prices, given the disruption a conflict could have on global supplies”.
The risk of possible military escalation in the Middle East is gaining traction, and thus, traders appear to hedge against worst-case scenarios,” said Priyanka Sachdeva, a senior market analyst at Phillip Nova. She added that the current prices were “largely driven by anticipation rather than actual supply loss”.
Washington and Tehran are set to hold a third round of nuclear talks in Geneva this Thursday.
