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The Bank of England warned that technical companies are sensitive to the risk amidst the potential “disappointing” progress around the artificial intelligence (AI) that the growing evaluation will decline rapidly.
The bank’s Financial Policy Committee (FPC) said, the risk of “rapid improvement” in financial markets has increased.
The latest meeting minutes of FPC wrote: “On many measures, the evaluation of the equity market appears to be increased, especially for technology companies focused on artificial intelligence.
“When it is combined with increasing concentration within the market indices, equity markets are particularly exposed when expectations about the impact of AI are less optimistic.”
It states that there is a risk that AI capacity or adoption “disappointing” progress, or increasing competition may reduce evaluation in the entire region.
The FPC stated that “physical obstacles in AI progress”, including electricity, data or commodity supply chains, can also damage evaluation, especially for firms that are expected to benefit from more AI investment.
It has come at a time when there has been a boom in the evaluation of technical companies amidst the hope of adopting AI technology worldwide.
Huge technology companies like Nvidia, Google And Microsoft has all seen an increase in their share prices in the last year.
Meanwhile, the bank’s FPC expressed concern about America’s independence federal Reserve Coming under the pressure of US President Donald Trump,
It states that the central bank’s independence “underlines monetary and financial stability”.
The bank said, “A sudden or significant change in the perception of the Federal Reserve’s perception may result in sharp revaluation of US dollar assets, including the US sovereign debt markets, which is likely to increase volatility … and may be global spillover.”
Mr. Trump has demanded the removal of Federal Reserve Governor Lisa Cook on allegations of hostage fraud while buying a house in 2021, but a judge ruled that the shootout was illegal.
He has also repeatedly demanded that the Fed, led by the Speaker, Zerome polyReduce your major interest rate.
The Fed, like the Bank of England, works independently of the government – meaning it determines the interest rate policy without political intervention.
In the meeting, FPC also warned that the impact of Mr. Trump’s trade war has “not yet felt completely”.
It states that uncertainty on tariffs pose a risk for a global economic approach.
It states that geopolitical risks remain “increased”, while global conflicts have increased the possibility of energy supply, but also said that oil and shipping prices have come down since its last meeting earlier this year.
Despite the rising risks, experts assured that the UK’s banking system is equipped to support homes and businesses, even if the economic situation deteriorates than expected.
Families It states that high borrowing costs and cost of living are facing constant pressure, but the scenario is usually improving.