Financial stability risks as UK Government may back down on tax rate cut
This week should show that financial stability joins inflation as a critical risk for policymakers. That means financial stability risks should significantly supplant other risks, including inflation, when markets are undermined as they were during the Gilt-led sell-off in global fixed income last week. Taming inflation requires the trouble-free functioning of the market's plumbing when tightening monetary policy. Hence central banks will be watching market liquidity gauges closely.