Complacency in markets because of continued monetary support: IMF

A “sense of complacency” is permeating markets as investors, betting on continued accommodative monetary policy, are stretching asset prices, risking a sudden market correction, the International Monetary Fund (IMF) warned on Wednesday.

The rollout of Covid-19 vaccines has boosted expectations of a global recovery and helped prompt a surge in asset prices, despite rising infections and persistent uncertainties surrounding the economic outlook, the world’s largest multilateral lender said in its Global Financial Stability Report.

Stretched asset valuations in some areas are largely contingent on government lifelines. Policymakers should be prepared for the risk of a market correction, which could exacerbate financial vulnerabilities