Policy uncertainty, including on global trade and central bank independence, and overall geopolitical risk topped the list of financial stability concerns in a new Federal Reserve survey released on Friday, Nov. 7.
The biannual Financial Stability Report also found that acute concerns about artificial intelligence are on the rise. AI emerged as a stability risk, cited as a potential shock in the next 12 to 18 months by 30% of the U.S. central bank's market contacts.
The Fed said that concern was primarily focused on how sentiment towards AI had driven recent stock gains, and how a shift in that perspective could lead to "large losses" in markets and potentially broader economic implications.
Persistent inflation, higher long-term interest rates and fiscal debt sustainability were also among the most cited stability concerns in the near term, the Fed said. See more findings.