October 20, 2021
Economy

Rising inflation could trigger global sell-off that would harm UK, says Bank | Bank of England

The Bank of England has warned that rising inflation could trigger a sell-off in global financial markets, with damaging consequences for the UK economy.

Against a backdrop of soaring energy prices and severe shortages of workers and materials, Threadneedle Street said inflationary pressures were rising as the pace of economic recovery from the pandemic slows.

In its regular financial health check, the Bank’s financial policy committee said risky asset prices in several markets had risen to historically high levels and could be primed for a sharp fall amid rapid growth in inflation.

“Asset valuations could correct sharply if, for example, market participants re-evaluate the prospects for growth, inflation or interest rates,” the FPC said.

The warning shot comes as supply problems caused by Covid-19 and Brexit drive up business costs at the fastest rate since at least the 1990s,…

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