Bank of England Blog

Daniel Ostry, Roger Vicquéry and Emilio Zaratiegui There is growing concern among policymakers, international organisations, and even big-tech Chief Executive Officers (exhibits I, II and III) that the current artificial intelligence (AI) boom features valuations increasingly detached from fundamentals. The Bank’s February 2026 Monetary Policy Report noted that an asset price correction is a key risk to the global economy, while the Bank’s July 2026 Financial Stability Report presented a

Sandra Batten Unlike previous waves of automation, machine learning and generative AI (Gen AI) technologies can perform non-routine cognitive tasks, such as those involving written or spoken language, and have the potential to affect a wider range of occupations. By augmenting or replacing workers in these tasks, these technologies promise to deliver significant productivity gains. AI adoption, while still limited, seems to be linked to productivity gains across industries in the US, alth

Haley Schlicht From Silicon Valley executives promising to automate white-collar work to headlines claiming AI is foreclosing the graduate entry market, the strained ‘low fire, low hire’ environment has increasingly been ascribed to technological transformation. UK vacancies nearly halved since their 2022 peak – a contraction so sustained it has reshaped the British hiring market for the better part of three years. This post examines how evidence of AI-driven transformation at

Joe Grimshaw Who are the UK’s mortgage borrowers, and how do their characteristics differ? Despite extensive literature on mortgage profiles, loan-level segmentation remains limited, existing work relies on aggregates or predefined categories. I address this gap by applying unsupervised machine learning to 20 years of data, allowing the model determine segments without prior assumptions. Three clusters emerge: one with low leverage, and two with high leverage but notably different i

Belinda Tracey and Neeltje van Horen The Help-to-Buy (HTB) programme introduced in 2013 reopened the 95% loan to value (LTV) segment of the UK mortgage market, thereby reducing the minimum deposit requirement for many first-time buyers (FTBs) from 10% to 5% (Chart 1). That policy change offers a useful natural experiment to study how deposit constraints shape access to homeownership. We previously demonstrated that this easing of deposit constraints generated a clear increase in local spe

John Lewis Covid travel restrictions limited movement of people but also made cross-border goods trade more difficult.  Did this contribute to the fall in global goods trade during the pandemic, and if so by how much? In a recent paper using a structural gravity model on global trade flows with domestic trade, I show that a full closure reduced trade for a typical country pair by around 19%, implying a peak hit to global trade of about 23% in 2020 Q2. Hits were larger for nearby partners,

Ivona Cickovic and Andrea Serafino Machine learning models are increasingly used in organisational decision-making, yet their inner workings often remain opaque. When these systems influence real world outcomes, knowing what they predict is not enough – we also need to understand why. Explainability methods aim to illuminate this ‘black box,’ and feature attribution tools that link predictions to individual inputs are especially popular. They feel intuitive but rely on strict data assumpt

David Rule In August 1977, the Bank of England purchased the bank Slater Walker Limited, completing its rescue. The bank had been a subsidiary of Slater Walker Securities, controlled by Jim Slater, which also owned an insurer. This post describes how Slater misused depositors’ and policyholders’ funds to finance his wider business interests. The Bank of England sought to protect depositors by supporting the wider group rather than putting the bank into liquidation. The case remains releva

Andrew Hewitt Sunday 1 March 2026 was the 80th anniversary of the Bank’s coming into public ownership, following the Bank of England Act 1946. It was the first of eight major nationalisations by the post-war Labour government and the only one not to be later reversed, in whole or in part. Some opponents, at the time, were said to consider it a revolutionary ‘measure of first-class importance’; others considered it inconsequential. Although it was a defining point in UK financial history,

John Lewis The recent near halving of Bitcoin’s price has reignited debate about its true value. As a store of value, net present value asset pricing models suggest it should be worth zero because it pays no dividend. Yet its price remains far above zero, and its total value is still large despite recent turbulence. In this post I explore the question: what’s Bitcoin’s value as a means of exchange? I show that using a simple quantity theory of money framework helps explain its extreme vol

Prem Munday Agentic commerce, where artificial intelligence (AI) systems act on behalf of users to find products, negotiate purchases, and execute payments, is developing rapidly. This creates shared responsibility: developers must build legally sound systems, while regulators and infrastructure operators must consider how existing frameworks apply and where new approaches may be needed. The Bank of England operates, oversees and is co-ordinating the design of payment systems as part of i

Nades Raviraj and Danny Walker Big and uncertain shocks have pushed UK inflation above the 2% inflation target over the past few years. How did financial markets view the Monetary Policy Committee’s (MPC’s) monetary policy during this unprecedented period? We show that markets have come to perceive the MPC’s policy stance as increasingly dependent on data releases. In particular, the responsiveness of UK market rates in tight windows around data releases rose significantly from 2022

Maximilian Huppertz It is well established that climate change affects productivity, but its effects on trade costs have not been studied. Ignoring these and focusing solely on productivity could lead to an underestimate of its overall impact. It could also create a source of climate-related risk, with the potential to affect the financial system through trade finance and insurance. In a recent Staff Working Paper, I show that climate change indeed affects trade cost, driven by its i

Vedanta Dhamija, Ricardo Nunes and Roshni Tara Inflation has been widely discussed in recent years, from supermarket aisles to newspapers. But what if what people think inflation is stems not only from grocery prices or energy bills, but from more? Our analysis in Dhamija et al (2026) shows house prices matter in this context, ie housing is salient. Using household surveys for the United States, we find that people tend to overweight their expectations about house prices when thinking abo

Will Banks and Kemal Erçevik When extreme weather hits, households typically turn to insurers to cushion the financial blow. But rising temperatures and greater exposure in high-risk areas could test the insurance sector’s capacity to absorb such losses. As the Financial Policy Committee has highlighted, climate change could create insurance protection gaps, leaving households vulnerable and shifting risks across the financial system. We have built a model to estimate potential protection

Aaron Clements-Partridge and Ryland Thomas Broad money aggregates failed policymakers when used as an intermediate target in the 1980s, but they appeared to predict the post-pandemic inflation. Where does that leave their role in setting monetary policy today? That was the topic of a recent workshop hosted by the Bank on ‘Analysing the Information Content of Money’ which brought together academic experts and central bank staff to review the evidence. In this blog we offer our key takeaway

Lily Smith Research on payment preferences in the UK has rarely explored how preferences and experiences vary by disability type, often treating disabled people as a homogenous group. Recent Bank of England research addresses this gap by focusing on the payment preferences and behaviours of different disability types and shows that, for disabled people, payment choice is crucial for reducing stress, building confidence, and supporting independence. In 2025, the Bank of England cond

Anthony Savagar, Misa Tanaka and Jagdish Tripathy With increased availability of big data and computing power, more firms are adopting algorithmic and AI-powered pricing to adjust prices rapidly in response to changing economic conditions over time and across consumers. This post reviews the existing research, draws implications for central banks, and identifies areas for further research on this topic. The research reviewed here was also used to inform Lombardelli and Patel (2026). The e

Boromeus Wanengkirtyo, Ivan Yotzov and Mishel Ghassibe Can tomorrow’s costs affect firm prices today? When a temporary tariff schedule on imported inputs was announced in March 2019, many UK firms adjusted prices in anticipation – despite the potential cost change being in the future. In a recent working paper, we use firm‑level survey data to estimate ‘intertemporal pass‑through’ (IPT): how much expected future marginal costs move current prices. Consistent with modern macroe

Federico Pessina, Maren Froemel and Ivan Yotzov Understanding inflation expectations is key for monetary policy makers and has been central to the policy debate in recent years. We use data from the Decision Maker Panel (DMP) – an economy-wide UK business survey – to analyse businesses’ expectations about aggregate CPI inflation, and the relationship with their own-price expectations. On average, firms are attentive to current inflation rates, but larger and more productive firms report m