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6mo ago

IMF Warns Markets May Be Underestimating Geopolitical Risks

The IMF highlights a disconnect between low market volatility and rising global tensions, cautioning against potential financial shocks.

A Wall Street sign hangs in front of a U.S. Flag outside the New York Stock Exchange (NYSE) before the Federal Reserve announcement in New York City, U.S., September 18, 2024. REUTERS/Andrew Kelly/File Photo
The escalating wars in many regions, including Lebanon, post a real risk to the world stock markets

Overview

  • Near-term global financial risks appear contained, but monetary policy easing could lead to asset price bubbles.
  • The IMF's Global Financial Stability Report points to potential market shocks due to geopolitical uncertainties and upcoming elections.
  • Military conflicts and unclear policies from newly elected governments are increasing economic uncertainty.
  • Central banks are urged to communicate clearly and cut rates gradually to manage investor expectations.
  • Rising use of AI in finance could boost efficiency but also heighten market volatility and operational risks.