Keep Covid rescue programmes or risk triggering stock market crash, warns IMF

Keep Covid rescue programmes or risk triggering stock market crash, warns IMF

Governments and central banks must maintain their pandemic rescue programmes or risk triggering a stock market crash, the International Monetary Fund has said.

Warning that there were legitimate concerns about a share price bubble, the Washington-based organisation said that without continued low interest rates and government subsidies it was possible a "correction“ in stock markets would occur.

In a report issued to coincide with the World Economic Forum, the IMF said investors had ignored recent data showing major economies slowing as the pandemic persisted through the winter months. There was also the prospect that vaccination programmes would take longer to roll out, especially across the developing world, forcing governments to maintain restrictions for a longer period.

Financial markets have rebounded since last March and some have soared to fresh highs.

The S&P 500, which accounts for a cross section of the largest 500 US companies, slumped by a third last spring from a high before the pandemic of 3,386. Since then it has climbed to 3,849, up more than 13% from the level in February 2020.

The FTSE 100 in London was at 7,534 in January last year and has struggled to recover from a drop in value of 2,500 points ever since. It grew