ECB President Christine Lagarde warned that Europe must develop its own AI technology and datacentre infrastructure to avoid dependence on the US and China, which currently dominate AI model production and computing capacity. She cautioned that without independent AI capabilities, Europe risks economic vulnerability and loss of autonomy in critical sectors, while highlighting that rapid AI adoption could boost productivity by up to 4% over a decade.
Global bond markets are experiencing a sell-off as surging oil prices above $107 per barrel, driven by Houthi advances in Yemen and the Iran conflict, intensify inflation concerns. Central banks including the ECB are raising interest rates in response, pushing borrowing costs to their highest levels since 2007 in the UK and 2023 in the US, creating fiscal challenges for governments.
The European Central Bank raised its key deposit rate by 25 basis points to 2.5%, a widely expected move amid elevated inflation driven by Middle East energy disruptions. Uncertainty about the U.S.-Iran conflict and its duration clouds the outlook for future rate decisions, with market watchers divided on whether additional hikes will follow.