BOE Says Soaring AI Valuations Risk Sharp Market Correction (1)

Stretched valuations for artificial intelligence companies and challenges to the Federal Reserve’s independence have fueled the risks of a “sharp market correction,” the Bank of England said on Wednesday.

In its quarterly financial stability update, the UK central bank said asset valuations had continued to rise and credit spreads tighten since its June review, despite “persistent material uncertainty around the global macroeconomic outlook.”

Equity market valuations appear “stretched” with “technology companies focused on AI” particularly vulnerable, especially if “expectations around the impact of AI become less optimistic,” officials said, according to minutes of the Financial Policy Committee meeting held ...