The Bank of England sees trouble ahead for global financial markets if investors U-turn on the prospects for artificial intelligence (AI) ahead.
The Bank’s Financial Policy Committee said in its latest update on the state of the financial system that there was also a risk of a market correction through intensifying worries about US central bank independence.
“The risk of a sharp market correction has increased,” it warned, while adding that the risk of “spillovers” to these shores from such a shock was “material”.
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Fears have been growing that the AI-driven stock market rally in the United States is unsustainable, and there are signs that a growing number of investors are rushing to hedge against any correction.
This was seen early on Wednesday when the spot gold price surpassed the $4,000 per ounce level for the first time.
Analysts point to upward pressure from a global economic slowdown driven by the US trade war, the continuing US government shutdown and worries about the sustainability of US government debt.
The political crisis in France has also been cited as a reason for recent gold shifts.
Money has also left the US dollar since Donald Trump moved to place his supporters at the heart of the US central bank, repeatedly threatening to fire its chair for failing to cut interest rates to support the economy.
Jay Powell’s term at the Federal Reserve ends next spring but the White House, while moving to nominate his replacement, has already shifted the voting…
