The Bank of England is expected to keep interest rates unchanged at 3.75% on Thursday, as policymakers wait for clearer evidence that inflation is under control despite growing concern about the labor market. Markets see less than a 1% chance of a rate cut and most economists expect a 7 to 2 vote to hold, with only Alan Taylor and Swati Dhingra likely to support a reduction. Inflation remains elevated at 3.4% but is forecast to fall to the 2% target in the second quarter, keeping hawkish members cautious. At the same time, unemployment has risen to 5.1% and redundancies have increased, raising concerns about economic weakness. Recent data has been mixed, with stronger GDP growth, solid retail sales and improving business activity offset by labor market deterioration. Governor Andrew Bailey is expected to back a hold while signalling further gradual easing ahead, with markets pricing about a 70% chance of the next rate cut in April.

The European Central Bank is widely expected to keep interest rates unchanged on Thursday, as policymakers weigh the impact of a stronger euro and a wave of low-priced Chinese imports on the inflation outlook. Data released Wednesday showed euro area inflation eased to 1.7% in January, the lowest since September 2024, while core inflation unexpectedly slipped to 2.2%, its lowest level since October 2021. The ECB has held policy steady since June, and markets see little scope for near-term shifts as the eurozone economy shows signs of resilience and inflation remains close to target, with President Christine Lagarde expected to reiterate that policy is in a “good place.” Still, the euro’s recent rally has sparked concern within the Governing Council: Austria’s Martin Kocher warned that further appreciation could push the ECB to resume rate cuts, while France’s François Villeroy de Galhau pointed to the dollar’s recent depreciation as a key factor shaping the bank’s outlook.

The STOXX 50 rose 0.5% on Thursday, while the broader STOXX 600 slipped 0.2%, as investors digested a fresh batch of corporate earnings and braced for monetary policy decisions from the Bank of England and the ECB later in the morning. Shell fell 1.6% after missing profit estimates amid lower crude prices. BBVA tumbled more than 4% as its results failed to meet investor expectations. Maersk plunged nearly 6% after warning of a decline in earnings in 2026, while Vestas slid 2.6% following a profit miss. Rheinmetall also dropped 4.2%. On the upside, BNP Paribas gained 3% after raising its outlook for shareholder returns, and ArcelorMittal climbed 0.9% after reporting a stronger-than-expected Q4 profit. ASML Holding (+1.5%), Siemens (+1.2%), SAP (+1.9%), and Prosus (+3%) also traded higher. On the monetary front, both the BoE and the ECB are widely expected to leave interest rates unchanged.

Industrial production in France fell by 0.7% month-on-month in December 2025, reversing an upwardly revised 0.1% gain in the previous month and defying market expectations of a 0.2% increase. This marked the first decline since August, as manufacturing output slipped (-0.8% vs 0.5%), driven mainly by a sharp fall in the manufacture of transport equipment (-9.9% vs 3.8%). The drop was led by declines in the manufacture of other transport equipment (-15.8% vs 4.3%), particularly in aerospace construction, where the steep fall in December offset the gains recorded over the previous three months. Moreover, output in water supply, sewerage, waste management and remediation fell significantly (-2.1% vs -0.2%). In contrast, output declined at a softer pace in mining and quarrying (-0.2% vs -1.7%) and electricity, gas, steam and air-conditioning supply (-0.1% vs -1.8%). On a quarterly basis, industrial production rose 0.3%, while the year-on-year output increased 1.8%.

Indonesia’s GDP advanced 5.39% yoy in Q4 2025, accelerating from 5.04% in Q3 and surpassing market expectations of 5.01%. It was the strongest yearly growth since Q3 2022, boosted by solid private consumption (5.11% vs 4.89% in Q3) on continued government support measures and lower borrowing costs, even as government spending slowed (4.55% vs 5.66%). Also, fixed investment gained traction (6.12% vs 5.04%). However, net trade was less supportive, with export growth sharply easing (3.25% vs 9.14%) while imports picked up (3.96% vs 0.86%). By sector, output quickened in agriculture, forestry and fishing (5.14% vs 4.93%), wholesale/retail trade (6.07% vs 5.46%), transport and warehousing (8.98% vs 8.62%), and finance and insurance (7.92% vs 0.77%). For the full year, GDP rose 5.11%, below the government’s 5.2% target, reflecting the impact of natural disasters in three provinces, though still the strongest annual growth in three years. For 2026, the economy is expected to grow by 5.4%.

Silver plunged as much as 16.5% to around $73.5 an ounce on Thursday, snapping a 2-day rebound as precious metals faced renewed selling pressure and heightened volatility. Despite hopes that dip buyers might step in at lower levels, the decline in silver and other metals appears set to continue after the recent rebound failed to hold. The selloff coincided with a stronger dollar, fueled by hawkish signals from the Federal Reserve and expectations of a slower pace of US rate cuts. Investors considered the implications of Kevin Warsh’s nomination as Fed chair, noting his preference for a smaller Fed balance sheet and expectations that he would be less aggressive on rate reductions. Additionally, geopolitical tensions eased after the US and Iran scheduled a fresh round of talks for Friday, though the scope remains uncertain. Tehran seeks to confine discussions to its nuclear program, while Washington wants to address ballistic missiles, regional militant support, and human rights issues.