Category: 3. Business

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A top Bank of England policymaker has warned against rapid interest rate cuts despite anti-inflation measures in the Budget, as splits persist within the bank’s key committee ahead of a vote next week.

Clare Lombardelli, a BoE deputy governor, stressed the “upside risks” to inflation as she argued for a cautious approach to further rate reductions as the bank gets closer to a more neutral level of interest rates. 

This came despite BoE analysis that shows measures in Rachel Reeves’ Budget aimed at easing the cost of living could trim as much as 0.5 percentage points from inflation next year. 

“We have been on this path for some time; my view is as you approach your turning point off that path, and you don’t know where it is, you might slow down a bit,” Lombardelli said. “I worry more about the upside risks to inflation.”

Her words on Tuesday came in a meeting of the Treasury select committee ahead of the BoE’s rate-setting meeting next week. Markets are expecting the bank to trim another quarter point from rates at the meeting, but the hearing suggested members of the Monetary Policy Committee remain heavily divided. 

Lombardelli was one of five MPC members who voted against a rate reduction in a narrow decision to hold rates at 4 per cent at the BoE’s November meeting. Among those who sided with her in the vote was external MPC member Catherine Mann, who questions whether inflation will decelerate as rapidly as the BoE’s central forecast implies. 

“I have been sceptical that headline CPI inflation will decelerate so quickly and sustainably to the 2 per cent target by mid-2027 as outlined in the November Monetary Policy Report,” Mann said in a written report to MPs on Tuesday.

“However, my concerns for sticky inflation, particularly of services, would be assuaged if the employment outlook deteriorates faster than projected.”

By contrast, BoE deputy governor Dave Ramsden called for a quarter-point rate reduction at the November meeting. In his written report to the Treasury committee, Ramsden struck a dovish tone on the rates outlook. 

Absent unforeseen shocks, he said, “I think we can have increasing confidence that the currently restrictive level of Bank Rate will support the disinflation process, and bring headline inflation below 3 per cent by spring 2026 and back towards the 2 per cent target by 2027.”

Swati Dhingra, another external MPC member, said that given the slowdown in the labour market, she did not see why higher inflation expectations would translate into a resurgence of inflation. “I don’t see a particular need to be so restrictive at this point,” she said. 

Lombardelli said rate-setters needed to be “open-minded” about the impact of Budget measures aimed at easing household utility bills as well as other costs, including rail fares. These should reduce headline inflation by between 0.4 and 0.5 percentage points in the second quarter of next year, she argued. 

But she said other Budget measures pointed to slightly looser policy in the near term.

The BoE needed to be careful about rate reductions as it got closer to the end of its rate-cutting cycle. “I am ​very worried that we are seeing more pressure on resources in the economy, and ‍that obviously leads to price rises,” she added. 

“I am also perhaps less convinced than others about how restrictive monetary policy is at the moment.”

A key factor in next week’s BoE meeting is the stance of governor Andrew Bailey, who was not testifying at the Treasury committee hearing on Tuesday. He has emerged as the key swing voter in next week’s meeting.

In the November MPC meeting, Bailey left the door open to a move as soon as next week, saying “upside risks to inflation have become less pressing since August, and I see further policy easing to come if disinflation becomes more clearly established in the period ahead”.

Unlock the Editor’s Digest for free

Roula Khalaf, Editor of the FT, selects her favourite stories in this weekly newsletter.

Silver prices have punched through $60 per ounce for the first time amid a historic rally driven by a scarcity of supply and a surge in demand from investors.

The metal has more than doubled in price since January, as years of undersupply, compounded by strong demand from industrial users and investors, led to shortages and a severe supply squeeze in October.

Silver jumped 4 per cent on Tuesday to reach $60.4 per ounce, a fresh record high. Gold also rose 0.7 per cent to reach $4,216 per troy ounce, slightly below the record set in October.

This week expectations of a rate cut by the US Federal Reserve, which meets Wednesday, have boosted precious metals.

“In the very near term, the focus is on the Fed rate meeting,” said Suki Cooper, analyst at Standard Chartered.

“Underlying the move is the fact that we have a market that has been undersupplied for the past five years, and we still have regional stocks dislocation,” she added.

Silver is used in jewellery and coins, but demand has also boomed for industrial uses, such as in electronics and solar panels.

Unlike gold, silver is mainly produced as a byproduct of other minerals, so miners have not been able to easily respond to the rising demand in recent years.

In recent months, a huge stockpile of silver has built up in the US, as a result of fears of potential US tariffs on silver, compounding a shortage elsewhere.

Although the stockpile has started to dwindle slightly in recent weeks, silver inventories on the Comex are still about 456mn ounces, three times their historic average.

The US is expected to publish its Section 232 review on critical minerals in coming weeks, which may outline fresh commodity tariffs, including potentially on silver.

This year the US added silver to its list of critical minerals. The country is already a significant silver producer.

“Whilst the market is in deficit, we expect regional tightness to persist,” said Helen Amos, commodity analyst at BMO, pointing out low stocks in China.

Retail investors have also chased silver higher, particularly in North America, where the metal is often referred to as the “poor man’s gold”, Amos added.

In an individual-patient pooled analysis reported in the Journal of Clinical Oncology, Raimondi et al found that neoadjuvant treatment with dual CTLA-4/PD-(L)1 immune checkpoint inhibitors (ICIs) was associated with higher pathologic response rates vs perioperative FLOT (fluorouracil, leucovorin, oxaliplatin, and docetaxel) in patients with deficient mismatch repair (dMMR)/microsatellite instability–high (MSI-H) resectable gastroesophageal adenocarcinoma.

Study Details

The study included 197 patients from seven clinical trials who received: neoadjuvant dual CTLA-4/PD-(L)1 ICIs with or without surgery, perioperative FLOT and surgery, and surgery with or without older perioperative/adjuvant chemotherapy regimens. Primary outcome measures included pathologic complete response and major pathologic response.

Key Findings

Among the 197 patients, 49 received ICIs, 27 received FLOT, 33 received surgery alone, and 88 received older chemotherapy regimens.

Among 69 patients who underwent surgery after ICIs or FLOT, those receiving ICIs had significantly higher pathologic complete response rates (61.9% vs 3.7%; odds ratio [OR] = 54.8; P = .002) and major pathologic response rates (78.6% vs 10.0%; OR = 39.3; P < .001), as well as higher rates of pN0 (OR = 4.2; P = .015) and pT0-2 (OR = 16.4; P < .001).

No significant differences in event-free survival or overall survival were observed.

Among all patients, residual nodal disease (ypN1) or ypT4 status after neoadjuvant ICIs or FLOT and an absence of pathologic response were associated with poorer progression-free and overall survival.

The investigators, including corresponding author Filippo Pietrantonio, MD, of the Department of Medical Oncology, Istituto Nazionale Tumori IRCCS, Milan, Italy, concluded: “In resectable dMMR/MSI-H [gastroesophageal adenocarcinoma], neoadjuvant ICIs significantly increase pathologic response and downstaging vs FLOT, with comparable [event-free survival/overall survival] with surgery with or without chemotherapy. The higher proportion of ypN0 and lack of ypT4 after neoadjuvant ICIs vs FLOT should drive preoperative treatment choices in clinical high-risk disease. The high proportion of [pathological complete responses/major pathological responses] with ICIs provides rationale for exploring organ-sparing surgery or nonoperative management.”

Raimondi A, et al: J Clin Oncol 43:3457-3467, 2025. 

The online card service Moonpig has reported a bump in sales thanks in part to its increased use of AI to help design cards, personalise customers’ messages and answer queries.

The company said sales rose 6.7% to £169m in the six months to 31 October and had remained strong in the weeks since then, largely as as result of increased orders and spend per order at its main Moonpig brand.

“AI is now designing a lot of cards for us,” said its chief executive, Nickyl Raithatha. He said technology had helped create everything from baby and birthday cards to corporate greetings linked to a particular business.

“It is still being managed by our in-house team. We make sure a person will look at it and it is relevant and exciting for customers. We don’t want to fill our site with generic design. We are treading carefully.”

The strong sales helped lift the company, which also operates Greetz elsewhere in Europe and sells vouchers for experiences such as spa days and cinema trips, back into the black with a pre-tax profit of £26.6m for the half year compared with a £33.3m loss a year before.

About half of purchases involve shoppers using AI-led features to help add a creative spin to their messages, whether that is a sticker, photo or personalised handwriting, up from only about 2% two years ago.

Recent developments in the technology allow a shopper to automatically adapt a broad range of designs to fit certain requirements, such as targeting a particular age or relative.

The company said its new AI chat system already resolves about a third of all queries and said: “customers consistently rate these interactions far more highly than human-handled ones”.

Raithatha said the company was “not looking at this as a threat or reduction in jobs” but it could step up productivity by suggesting 50 or more designs that a person could edit, adapt or curate rather than designing just one or two cards in a day.

“We still need that creativity,” said the CEO, who is stepping down at the end of this month and will be replaced by Catherine Faiers, the chief operating officer of the secondhand car marketplace AutoTrader.

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Raithatha said that the tax and spending changes announced in the chancellor’s budget last month had not led to any noticeable change in customer behaviour but recent trading had been “very encouraging” with a “great start to peak trading” over the festive period.

He added that there was “hopefully less uncertainty” now the measures had been announced, which made “businesses more able to make decisions”.

Translations: L’engorgement des chaînes d’approvisionnement en aérospatiale continue de freiner les compagnies aériennes (pdf)

Las aerolíneas continúan sufriendo las consecuencias de los cuellos de botella de la cadena de suministro aeroespacial (pdf)

国际航协：供应链瓶颈继续制约航空业发展 (pdf)

(pdf) اختناقات سلاسل التوريد في قطاع الصناعات الجوية والفضائية تواصل فرض قيودها على شركات الطيران

Geneva – The International Air Transport Association (IATA) updated its analysis of aerospace supply chain bottlenecks noting that aircraft availability remains one of the most significant constraints on industry growth in its just released global outlook.

While deliveries of new aircraft began to pick up in late 2025 and production is expected to accelerate in 2026, demand is forecast to outstrip the availability of aircraft and engines. The normalization of the structural mismatch between airline requirements and production capacity is unlikely before 2031-2034 due to irreversible losses on deliveries over the past five years and a record-high order backlog.

Notable points on the current situation include:

• Delivery shortfalls now total at least 5,300 aircraft.
• The order backlog has surpassed 17,000 aircraft, a number equal to almost 60% of the active fleet. Historically, this ratio was steady at around 30-40%. This backlog is equivalent to nearly 12 years of the current production capacity.
• The average fleet age has risen to 15.1 years (12.8 years for aircraft in the passenger fleet, 19.6 years for cargo aircraft, and 14.5 years for the wide-body fleet).
• Aircraft in storage (for all reasons) exceed 5,000 aircraft, one of the highest levels in history despite the severe shortage of new aircraft.

“Airlines are feeling the impact of the aerospace supply chain challenges across their business. Higher leasing costs, reduced scheduling flexibility, delayed sustainability gains, and increased reliance on suboptimal aircraft types are the most obvious challenges. Airlines are missing opportunities to strengthen their top-line, improve their environmental performance, and serve customers. Meanwhile, travelers are seeing higher costs from the resulting tighter demand/supply conditions. No effort should be spared to accelerate solutions before the impact becomes even more acute,” said Willie Walsh, IATA’s Director General.

As production bottlenecks continue, new challenges and impacts are being revealed:

• Delivery delays are compounded by several factors, including:
  • Airframe production is outpacing engine production (which is constrained due to issues with existing engines). This is resulting in newly completed airframes being parked until engines are available.
  • Longer timelines for new aircraft certification (from 12-24 months to four or even five years) are delaying entry into production/service, particularly impacting long-haul fleet renewal.
  • Tariffs on metals and electronics resulting from US-China trade tensions have worsened some supply bottlenecks and raised some maintenance costs.
  • A shortage of skilled labor, especially in engine and component manufacturing, is constraining production ramp-up plans.
  • The fragility of the aerospace supply chain network (often reliant on a limited number of suppliers for critical parts) can become an acute constraint amid economic uncertainty, changing tariff regimes, and tight labor markets. As a result, even small disruptions can be difficult to resolve and balloon to significant production delays.
• Fuel efficiency improvements are slowing as the fleet ages. Historically, fuel efficiency improved by 2.0% per year, but this slowed to 0.3% in 2025 and is projected at 1.0% for 2026.
• The situation for the air cargo fleet risks evolving:
  • Converted aircraft from passenger operations are in short supply as airlines keep them in use for passenger operations longer.
  • New-build wide bodies face production delays.
  • Older cargo aircraft which have been kept flying longer to compensate for slower fleet renewal will eventually reach hard limits on their useful life.

A recent study by IATA and Oliver Wymann estimated that the cost to the airline industry of supply chain bottlenecks will be more than USD 11 billion in 2025, driven by four main factors:

• Excess fuel costs (~USD 4.2 billion): Airlines are operating older, less fuel-efficient aircraft because new aircraft deliveries are delayed, leading to higher fuel costs.
• Additional maintenance costs (USD 3.1 billion): The global fleet is aging, and older aircraft require more frequent and expensive maintenance.
• Increased engine leasing costs (USD 2.6 billion): Airlines need to lease more engines since engines spend longer on the ground during maintenance. Aircraft lease rates have also risen by 20–30% since 2019.
• Surplus inventory holding costs (USD 1.4 billion): Airlines are stocking more spare parts to mitigate unpredictable supply chain disruptions, increasing inventory costs.

To help expedite solutions, the study pointed to several considerations:

• Open up aftermarket best practices by supporting Maintenance, Repair and Operations (MRO) to be less dependent on OEM-driven commercial licensing models, as well as facilitating access to alternative sourcing for materials and services.
• Enhance supply chain visibility by creating clearer visibility across all supplier levels to spot risks early, reduce bottlenecks and inefficiencies, and use better data and tools to make the whole chain more resilient and reliable.
• Use data more extensively in leveraging predictive maintenance insights, pooling spare parts, and creating shared maintenance data platforms to optimize inventory and reduce downtime.
• Expand repair and parts capacity to accelerate repair approvals, support alternative parts and Used Serviceable Material (USM) solutions, and adopt advanced manufacturing to ease bottlenecks.

> More on aviation supply chain

 

For more information, please contact:

Corporate Communications

Tel: +41 22 770 2967

Email: corpcomms@iata.org