Bank of England warns of growing risk that AI bubble could burst

The Bank of England has expressed concerns about the growing risk of a "sudden correction" in global markets, particularly due to the soaring valuations of leading AI tech companies. The central bank's financial policy committee has highlighted the possibility of a "sharp market correction" as a result of these inflated valuations. Additionally, the Bank has warned of the threats of a "sharp repricing of US dollar assets" if the Federal Reserve loses credibility in the eyes of global investors. This concern is fueled by the ongoing attacks on the US central bank by former President Donald Trump, who has threatened its independence. The Bank's warning underscores the potential vulnerabilities in the global financial system, particularly in the tech sector and the US dollar-based markets. Policymakers are cautioning about the increased risk of a sharp and disruptive market correction, which could have far-reaching consequences for the broader economy.