The sustainability of the AI boom, financial vulnerabilities and strained public finances are among pressure points facing the global economy, along with the return of inflation.
The interplay of record-high public debt with the increasing role of highly-leveraged hedge funds creates a new sovereign-financial stability nexus and poses growing financial stability risks.
Safeguarding price stability, ensuring fiscal sustainability, strengthening financial stability beyond the banking perimeter and structural reforms must be policy priorities. Discipline in each arm of policy expands the room in which the others have to act.
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