Bank of England Governor Andrew Bailey said interest rates may need to rise, warning officials “can’t afford to wait” for clearer evidence that surging energy prices are feeding through the economy. Two other rate-setters have also said borrowing costs could increase from 3.75% if high oil prices continue to squeeze household budgets. Investors are already pricing in a move to 4% in November, pushing up real borrowing costs in bond markets and tightening the government’s fiscal headroom. The Bank expects inflation to reach 4.2% early next year, while typical energy bills are projected to rise 24% to above £2,000.

Bank of England Deputy Governor Sarah Breeden said in Sintra, Portugal, that the central bank is running simulations on how AI-driven trading could amplify volatility if multiple systems try to place similar trades at the same time. The Bank is studying tools such as an AI “kill switch” and enhanced circuit breakers to limit or halt trading across markets if faulty models trigger a meltdown, working with Germany’s Bundesbank and the Bank for International Settlements. The work is tied to a cautious assessment of “agentic” AI becoming embedded in trading systems. The discussions remain at the research and policy stage, with no new rules or implementation timetable announced.

SpaceX shares fell nearly 30% over three days after its listing, including a 16.4% drop on Monday. The company said it plans to issue $20bn of investment-grade bonds to support its AI strategy, stoking concerns over a potential bubble in AI capital spending. The Nasdaq dropped 1.3% on Monday, while South Korea’s Kospi triggered a circuit breaker and Japan’s Nikkei fell 3.6%. Tesla, a core Musk holding and an AI-linked name, also came under pressure.