Global stock markets are trading at unsustainable levels and could face a sharp correction, according to a senior official at the Bank of England, who warned that current valuations do not fully reflect rising global risks.

Deputy Governor Sarah Breeden told the BBC that while equity markets are near record highs, underlying economic and geopolitical risks suggest a potential market adjustment is likely at some point, News.Az reports.

“There’s a lot of risk out there and yet asset prices are at all-time highs,” she said, adding that it is her responsibility to ensure the financial system remains stable in the event of a downturn.

Breeden did not predict when a correction might occur or how severe it could be, but stressed that regulators are closely monitoring vulnerabilities across global financial systems.

Her comments echo earlier warnings from the Bank of England, which has highlighted growing risks stemming from global economic uncertainty, inflation pressures, and geopolitical tensions.

She pointed to concerns over simultaneous shocks hitting multiple areas of the financial system, including government bond markets, private credit, and high-growth technology stocks.

A particular focus of concern is the rapid expansion of private credit markets, which have grown to an estimated $2.5 trillion over the past two decades.

“This sector has not yet been tested at scale with its current level of complexity and interconnectedness,” she warned.

The remarks come amid broader uncertainty in global markets, where investors continue to weigh economic growth risks against high valuations in equities and alternative assets.

Analysts say the warning highlights growing concerns among regulators that financial markets may be increasingly vulnerable to sudden shifts in sentiment.

News.Az 

By Aysel Mammadzada