Capital Economics: AI ‘bubble’ now more of a risk for markets than interest rates

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City AM

By Chris Dorrell Higher interest rates are unlikely to cause a major systemic risk but anxious investors should be wary of the continued AI-fuelled exuberance in the US stock market. In a note published yesterday, Paul Dales, chief UK economist at Capital Economics, said it was “too early” to be sure that higher rates would not cause further fractures in the financial system. Nevertheless, “the chances of a systemic financial event are diminishing,” he argued. Interest rates were near zero for over a decade following the financial crisis as global policymakers tried to inject some life into th…

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