Bank of England Deputy Governor Warns Stock Markets Too High, Set for Correction
L'essentiel
- Bank of England deputy governor Sarah Breeden has warned that stock markets are too high and will likely fall back due to multiple risks facing the global economy.
- Speaking to the BBC, she noted that asset prices are at all-time highs despite numerous risks, including high AI valuations and private credit market concerns.
- While not predicting an imminent correction, she emphasized the need for the UK financial system to be resilient enough to withstand a potential sharp adjustment.
Résumé généré par IA
Pourquoi c'est important
The warning comes amid record-high US stock market valuations despite ongoing Middle East conflict and other global uncertainties. The Bank's Financial Policy Committee has specifically highlighted risks from elevated AI valuations and the private credit market as areas of concern.
Stock markets are too high and set to fall, says Bank of England deputy. Good morning, and welcome to our rolling coverage of business, the financial markets and the world economy. Stock markets are too high, and are going to drop back at some point due to the many risks facing the global economy, one of Britain's top central bankers has warned. Bank of England deputy governor Sarah Breeden has issued the prediction to the BBC, at a time when the US stock market has risen to record levels despite the Middle East conflict. She points out: "There's a lot of risk out there and yet asset prices are at all-time highs. We expect there will be an adjustment at some point." This chimes with the latest assessment from the Bank's financial policy committee, which pointed to the risks from high AI valuations, AI disruption, and the private credit market. As she explains, the big fear is that several risk crystallise at the same time – such as an economic shock that leads to a rapid readjustment of AI valuations, and hurts confidence in private credit. Breeden is clear that she's not predicting a correction imminently… but is focused on making the UK financial system strong enough to cope. "What we are watching for: is how might those prices fall? Will there be a sharp adjustment downwards? And if there is such an adjustment, how will that affect the economy? I'm not saying it will happen today, tomorrow, in 12 months' time. It's ensuring that if it happens the system is resilient." The agenda 7am BST: UK retail sales report for March 9am BST: IFO survey of German business confidence 10.30am BST: Russia interest rate decision
Questions ouvertes
- When exactly might the correction occur
- How severe would the adjustment be
- What specific triggers could cause simultaneous risk crystallization
