11 February 2026: Starmer Hits Historic Low as European Leaders Face Revolt

In the past six months, every meeting of the Bank of England’s Monetary Policy Committee has ended with the Bank’s Governor having to cast the deciding vote as the other eight members have been perfectly divided between those who believe that rates should be cut to encourage growth in the economy, and those who a fearful that rate cuts will add to inflation which they believe is not yet under control.

The four hawks and the four doves come from both the permanent and independent members of the committee. Their backgrounds are varied, too: some are from academia, and some are economists.

No matter the “shifting sands" of the economy, each group maintains its view of the effect on the economy of changes to monetary policy.

Several market practitioners believe that the academics on the committee are treating the country’s economy as an experiment to test various theories. It is unlikely that this is the case, but the balance achieved places significant pressure on Andrew Bailey.

The Government studiously avoids any discussion regarding the MPC’s processes, believing that the BoE is genuinely independent.

This status quo could remain in place for some time, as the selection process for replacements when independent members' terms end appears sufficiently robust to ensure that affiliation with one side or the other is carefully maintained.

Political analysts believe that the Cabinet's support for the Prime Minister yesterday is little more than a stay of execution, as several members of the Government are vying to replace him. The two most obvious candidates are former Deputy Leader Angela Rayner and current Health Secretary Wes Streeting.

Neither has been coy about their desire to lead the Party, and there are likely ongoing behind-the-scenes machinations with both gauging the level of support they have among backbenchers.

The current intake from last year's elections includes the highest number of first-time MPs in almost fifty years, and it is hard to judge whether they remain loyal to the man they credit with getting them elected, or whether they want to remain MPs, seemingly at all costs. This may well play out until the elections in May, when the devolved governments in Scotland and Wales, along with several local elections, will take place.

The pound lost a little ground yesterday as politics remained the main driver of the market. It fell to a low of 1.3640 and closed at 1.3643.

Ford has said its tariff costs were $900m higher than expected last year because of a last-minute change to the Trump administration's tariff relief program.

The scheme is meant to help car firms offset US President Donald Trump's levies and allows car makers that import parts for vehicles assembled in the US to apply for credits.

But administration officials told the company in December that a new, later effective date for the policy would be set, leading to fewer gains from the credits than anticipated.

Chief executive Jim Farley said Ford spent double what it had expected on tariffs in 2025 - roughly $2bn, due to "the unexpected and late year change in tariff credits for auto parts".

Ford's higher-than-expected tariff bill underscores the volatility automakers continue to face as they grapple with tariff costs and lobby for exemptions from the levies.

Separately, Ford had previously disclosed a $19.5bn hit from its shift away from its electric-vehicle plans. Those charges contributed to its fourth-quarter net loss of $11.1bn.

The vehicle manufacturer had said it was backing away from plans to make large EVs, citing lacklustre demand and recent regulatory changes under Trump. The business case for leaning heavily into EV production, specifically large-sized EV models, has "eroded", the company had said.

Far more Americans disapprove than approve of Donald Trump's job performance. Immigration is thought to be one of the issues for which Americans are most likely to approve of Trump's job performance, but approval of his handling of immigration is at a record low.

37% of Americans strongly or somewhat approve of Trump's job performance, and 56% disapprove, a net job approval of -19

That's among the lowest net job approval Trump has ever received in Economist/YouGov polls during his first and second terms.

At this point in Trump's first term, he had a net job approval of -12

In a significant candid admission, Donald Trump has acknowledged a serious error regarding his choice for a key economic position. The former president discussed this major lapse in personnel judgment concerning Jerome Powell, the current chair of the Federal Reserve.

In remarks released on a Monday before an interview on Fox Business, Trump stated, “I made a mistake.” This comment reflects his regret over the 2017 decision to nominate Powell for the Federal Reserve’s top role. He attributed part of this decision to the influence of Steven Mnuchin, his former Treasury secretary, who strongly advocated for Powell’s appointment.

Federal Reserve Bank of Cleveland President Beth Hammack said interest rates could remain on hold for an extended period while officials evaluate incoming economic data.

“Rather than trying to fine-tune the fed funds rate, I’d prefer to err on the side of patience as we assess the impact of recent rate reductions and monitor how the economy performs,” Hammack said yesterday in Columbus, Ohio. “Based on my forecast, we could be on hold for quite some time.”

The Cleveland Fed chief has repeatedly urged her peers on the Federal Open Market Committee to be cautious with rate cuts to avoid stoking higher inflation. She supported last month’s decision to hold interest rates steady after three consecutive reductions at the end of 2025.

Meanwhile, Dallas Fed President Lorie Logan also spoke in favour of keeping rates unchanged unless the labour market showed new “material” weakness.

“We will learn in the coming months whether inflation is coming down to our target and whether the labour market will remain stable,” Logan said Tuesday at an event in Austin.

“If so, this would tell me that our current policy stance is appropriate and no further rate cuts are needed to achieve our dual mandate goals,” she said. “If instead we see inflation coming down but with further material cooling in the labour market, cutting rates again could become appropriate.”

Both Logan and Hammack are voters on the FOMC this year.

Almost relegated to a minor development, the once-vital non-farm payroll data for January will be published later today. It is expected that the economy created 70k new jobs last month, which is unlikely to produce a significant shift in the Fed's attitude to monetary policy.

The dollar index failed to react to weaker-than-expected retail sales figures. In January, retail sales were 2.4% higher, significantly lower than the 3.3% seen in December.

The index closed unchanged at 96.86.

MEPs have backed a European Parliament report saying the European Central Bank’s independence is essential to carrying out its main role of keeping prices stable.

The adopted text said the ECB must be able to take decisions free from political pressure, while remaining accountable and not operating in isolation, the parliamentary press service reported yesterday.

The bill was adopted with 443 votes in favour, 71 against and 117 abstentions.

The Parliament also said it supported the solidarity expressed by the ECB and Central Banks worldwide with the US Federal Reserve.

MEPs acknowledged ongoing work on introducing a “digital euro”, described in the text as a planned digital form of Central Bank funds, while also stressing the role of cash.

The text warned that if the growing digitalisation of payments is left exclusively to private and non-EU actors, it could create new forms of exclusion for users and merchants, and it called on the ECB to intensify its monitoring of crypto-assets.

The report said a faster return to price stability should have been achieved through ECB decisions during the recent period of high inflation. It encouraged the Central Bank to analyse the causes of what it called stubborn inflation to draw lessons for future crises.

Speaking since the latest rate-setting meeting, the Central Bank's chief economist has said that as long as the economy develops as projected, interest rate changes are unlikely to be on the agenda in the near term, confirming market bets that the bank would be on hold for some time after eight rate cuts in the year to last June.

"The Governing Council could be patient, although this should not be mistaken for being hesitant to act or being asymmetric," the ECB said in the accounts. "Overall, the ECB was currently in a good place from a monetary policy point of view, but this did not mean the stance was to be seen as static."

"Given the Governing Council’s medium-term orientation, the current market pricing of interest rates was seen as consistent with the latest fixings and in line with the Governing Council’s reaction function," the ECB added.

Inflation, the ECB's main focus, has hovered around the 2% target for most of the past year, and projections show it will remain near this level for years to come.

There may be some modest undershooting this year due to lower energy prices. Still, domesticinflation remains relatively high due to robust wage growth, supporting the argument that price growth will rebound to target once lower energy costs are removed from the base over time.

The common currency has been directionless so far this week. Yesterday, it fell to a low of 1.1886 and closed at 1.1895 as traders and investors took time to understand the likely next large move in markets.

Have a great day!