Week Ahead (8 May)
Thursday, 11 May – Bank of England to decide on interest rates
The Monetary Policy Committee (MPC) of the Bank of England (BoE) will meet on Thursday with expectations high that it will increase interest rates for the twelfth meeting in succession to tackle persistent inflation.
On 23 March, the Bank announced its eleventh consecutive rate hike raising interest rates by 25 basis points to 4.25%, the highest rate since 2008. The MPC decided with a majority of 7-2, with two of its members preferring to stick to a bank rate of 4%. In March, inflation softened to 10.1%, down from 10.4% in February, when it witnessed an unexpected jump after three months of consecutive declines after reaching a 41-year high of 11.1% last October.
To some extent, this drop could ease pressure on the BoE to keep raising interest rates. However, inflation is still more than five times higher than the BoE’s declared target rate of 2%. Inflation remained in double-digit figures and was still surprisingly above a consensus forecast of 9.8%. Furthermore, core inflation rose by 5.7% over the 12 months, remaining unchanged from its February rate, a point of particular concern for the BoE. Hence, markets widely expect one more rate increase in the UK, pricing in a 25-basis point hike, which could then mark the end of its tightening cycle.
Last month, the Office of National Statistics (ONS) announced that UK GDP grew by 0.1% in the three months to February 2023. According to the latest official forecasts, the UK would avoid a technical recession in 2023, with inflation forecast to be halved. Nevertheless, the UK is the only G7 country yet to fully recover its lost output during the pandemic, with its level of GDP in Q4 2022 being 0.8% below its pre-Covid level at the end of 2019.
Thursday, 11 May – European Parliament’s LIBE and IMCO Committees to vote on the final text of the AI Act
On Thursday, the European Parliament’s Committee on Civil Liberties, Justice, and Home Affairs (LIBE), and the Committee on Internal Market and Consumer Protection (IMCO) will vote on the final text of the AI Act, the world’s first AI rulebook. The Act, unveiled by the Commission in April 2021, comprises a set of proposed regulations, laying out uses of AI that are prohibited, as well as guidelines for the use of AI that are considered ‘high-risk’, by outlining a different set of rules tailored on a risk-based approach with four levels of risks: (I) unacceptable risk AI, (ii) high-risk AI, (iii) limited risk AI, (iv) minimal risk AI. The AI Act is seen as a crucial step in ensuring that AI is developed and used in a way that respects EU values and protects citizens' rights.
The vote will come after the file’s rapporteurs and shadow rapporteurs in the European Parliament reached a provisional political deal at the end of April, following months of negotiations. Disagreements on its most contentious points, such as regulating general-purpose AI, forbidding high-risk AI applications, and imposing sustainability rules for energy-consuming AIs had previously repeatedly postponed the official date for the final text. The text will include environmental standards for design, energy efficiency, and logging on "foundation models". The details of the text are now being ironed out, ahead of this week’s committee vote.
While the agreed text may still undergo some technical adjustments, it is expected to go to a plenary vote in mid-June, with the view of reaching an interinstitutional agreement before the end of 2023.
Thursday, 11 May – CSO to release data on consumer prices in Ireland
The Central Statistics Office will release its Consumer Price Index data on Thursday, covering the situation through April
The release of Consumer Price Index data in March revealed that prices rose by 7.7% between March 2022 and March 2023, with notable jumps in prices for housing, water, electricity, gas, and other fuels (up by 20.8%) and Food & Non-Alcoholic Beverages (up by 13.1%). Although the figures for March marked a drop from 8.5% in February, this was the 18th straight month where the annual increase in the CPI has been at least 5.0%.
Nevertheless, according to CSO’s flash estimate, this week’s release is expected to confirm another easing of inflation in April.
Friday, 12 May - Deadline for Irish DPC to implement EDPB’s legally binding decision on Meta’s transatlantic data transfers
On Friday, the Irish Data Protection Commission (DPC) is expected to notify its final decision on Meta’s transatlantic data transfers.
On 14 April, the European Data Protection Board (EDPB) issued a binding decision in relation to the case. Although little information was disclosed, the Board stated that it settled the dispute ‘’on whether an administrative fine and/or an additional order to bring processing into compliance must be included in the DPC’s final decision’’. DPC was granted a deadline of one month by the EDPB to issue its own decision, which could require Meta to halt EU-US data transfers and comply with the GDPR.
The dispute stems from a privacy complaint filed by Austrian campaigner Max Schrems in 2013. A new Transatlantic Data Privacy Framework (Privacy Shield 2.0) is currently being ratified by the European Commission. It aims to address the regulatory gap that led the original Privacy Shield agreement being invalidated by the European Court of Justice in 2020.
Last month, Meta disclosed in filings with the US Securities and Exchange Commission that it is preparing for a potential suspension order and expects to face corrective measures and a substantial fine from the DPC. The company anticipates that it will have until Q4 2023 to comply with the decision. Once the decision is issued, Meta will have the opportunity to appeal and seek a stay. However, the company is concerned that it may temporarily be left in a legal vacuum if the suspension order is not deferred until Privacy Shield 2.0 is in force.