Stock markets are too high and set to fall, says Bank of England deputy

Bank of England deputy warns stock markets are overvalued and poised for a significant correction. | Contesto: cronaca

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• Stock markets are too high and set to fall, says Bank of England deputy

Contesto

In an unusually blunt intervention, a deputy governor of the Bank of England has warned that global stock markets are trading at dangerously high levels and are likely to fall. The remarks, delivered during a speech in London on Thursday, mark a rare instance of a senior central bank figure offering such a direct assessment of market valuations, breaking with the institution’s traditional caution on asset prices. The official, who spoke on condition of anonymity under Bank protocol, said that current equity prices appeared disconnected from underlying economic fundamentals, including persistent inflation and slowing corporate earnings growth. “The risks are skewed to the downside,” the deputy governor stated, adding that investors may be underestimating the impact of higher interest rates on company balance sheets. The Bank has raised its key rate to 5.25 percent, the highest in 15 years, in an effort to tame inflation that remains above the 2 percent target. Financial analysts noted that the warning carries particular weight because the Bank of England typically avoids commenting on market levels, preferring to let its monetary policy decisions speak for themselves. “This is a significant departure from the norm,” said a market strategist at a London investment bank. “Central bankers usually steer clear of calling tops or bottoms in markets, so this suggests the Bank sees genuine froth that could unwind quickly.” The FTSE 100 has risen roughly 4 percent since the start of the year, but remains volatile amid uncertainty over the pace of rate cuts. The deputy governor’s comments come at a time when global stock indices, including the S&P 500 and the Nikkei 225, are hovering near record highs, driven largely by enthusiasm over artificial intelligence and expectations of central bank easing. Critics argue that such optimism ignores the lingering effects of tight monetary policy and geopolitical risks, including conflicts in Ukraine and the Middle East. The Bank’s warning may amplify calls for investors to rebalance portfolios toward safer assets, such as government bonds or cash. Economists are divided on whether a correction is imminent. Some point to strong...

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Categoria: cronaca