Central bank governors worldwide will focus on discussing stock market bubbles and the potential risk of a market crash during next week’s IMF and World Bank Annual Meetings. IMF Managing Director Kristalina Georgieva has already warned that current asset valuations are approaching levels last seen during the internet bubble 25 years ago, and a significant market correction could weigh on the global economy. The Federal Reserve, European Central Bank, and Bank of England, among others, have all expressed concerns about overvaluation in the markets and the risks of a correction.

Amid widespread skepticism over the ‘AI bubble theory,’ next week, central bank governors and finance ministers from around the world will gather in Washington for the International Monetary Fund (IMF) and World Bank Annual Meetings.

As the artificial intelligence boom drives global stock market valuations to historic highs, central bankers are collectively confronting a new concern: the risk of a market crash. According to media analysis, they may focus on how to respond to a potential market crash and its impact on the global economy.

IMF Managing Director Kristalina Georgieva has already set the tone for the discussions in the coming days in a recent speech. She candidly acknowledged risks to financial stability and warned:

Asset valuations are approaching levels we saw 25 years ago during the internet boom.

She noted that if markets experience a sharp correction, tightening financial conditions could weigh on global economic growth, expose vulnerabilities, and make the situation particularly difficult for developing countries.

This time, Georgieva’s warning is more direct than the IMF’s comments at the October 2000 meeting. Back then, in the organization’s World Economic Outlook report, equity valuations were merely described as ‘still high,’ with a caution that imbalances might unwind ‘in a disorderly manner.’

Stock Market Overheating: A Consistent Concern Among Global Central Banks

This concern is not an isolated case but reflects a broad consensus among major central banks worldwide.

Concerns about overheated markets have been brewing for some time. More than a month ago, officials at the European Central Bank were warned of a ‘sudden and sharp price correction’ during a policy meeting.

The Bank of England recently warned of the risk of a “sharp market correction”; the Reserve Bank of Australia also pointed out market vulnerabilities this month. Even Jerome Powell, Chair of the Federal Reserve, stated in September that the market is “highly valued.”

Officials see unsettling similarities, and this consensus across the Atlantic and Pacific makes next week’s discussions in Washington particularly critical.

A series of significant events will take place next week.

The 2025 IMF and World Bank Annual Meetings will be held from October 13 to 18.

In addition to the annual meetings, investors will focus on a series of major reports and official statements scheduled for release this week.

The IMF’s Global Financial Stability Report and the latest World Economic Outlook will be released next Tuesday. Statements from G7 or G20 ministers attending the meetings will also be closely monitored.

Regarding official speeches, Federal Reserve Chair Powell is scheduled to speak on the economic and monetary policy outlook next Tuesday. Additionally, Fed Governors Waller, Michael Barr, Milan, and several regional Fed presidents will deliver remarks. On Wednesday, the Fed will release the Beige Book, reflecting economic conditions across the United States.

Despite frequent official warnings, whether the market will cool down remains uncertain. Tom Orlik, Global Chief Economist at Bloomberg Economics, noted, “Artificial intelligence may be a bubble, but it is also an enormous force.”

He believes that the IMF’s warning about overvaluation is undoubtedly correct, but whether these warnings will resonate with investors troubled by the ‘fear of missing out’ (FOMO) sentiment is questionable.

Editor/jayden