BOE READY TO ACT IF AI STOCK BUBBLE BURSTS

Bailey delivered the remarks during testimony to the Treasury Committee, signaling the central bank's readiness to respond to market volatility stemming from an AI bubble burst. The warning reflects growing concerns about soaring valuations in AI-related stocks. Tech companies developing generative AI tools have seen their share prices surge, raising questions about whether current valuations are sustainable. Bailey's comments suggest the BOE is monitoring AI sector risks closely. A significant downturn could impact broader economic conditions, including inflation and employment, which influence monetary policy decisions. The governor did not specify what form BOE action might take, but his remarks imply rate adjustments remain on the table if market conditions deteriorate significantly. The statement adds to a chorus of warnings from financial regulators worldwide about potential AI market excesses. Central banks globally are grappling with how to assess risks in rapidly evolving technology sectors where traditional valuation metrics prove challenging to apply.