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Markets could face ‘sharp correction’, Bank of England warns

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LONDON (Reuters) – The historically high value of financial assets could correct sharply if investors reassess the prospects for recovery from COVID-19, with signs of increased risk-taking at investment banks, the Bank of England said on Friday.

The BoE’s Financial Policy Committee (FPC) said in a statement there was evidence that risk-taking remained elevated in a number of financial markets relative to historic levels.

“Asset valuations could correct sharply if, for example, market participants reā€evaluate the prospects for growth, inflation or interest rates,” the statement said.

“There are signs of continued loosening in underwriting standards and increased risk-taking in some investment banking businesses.”

(Reporting by Huw Jones and William Schomberg; editing by Sarah Young)

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