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From the U.K.’s abrupt intervention in the gilt market to Japan’s simultaneous withdrawal and injection of liquidity, the global economy is facing “elevated risks” similar to that of the leadup to the Great Financial Crisis, Lawrence Summers, the former U.S. Treasury secretary, said Thursday.
“In the same way that people became anxious in August of 2007, I think this is a moment when there should be increased anxiety,” Summers told Bloomberg Television in an interview.
Summers pointed to an array of mounting risks such as uncertainty about the outlook in economic policy, heightened geopolitical tensions amid Russia’s invasion of Ukraine, and significant leverage against a backdrop of rising interest rates and persistently high inflation.
Earlier this week, the Bank of England stepped in to buy long-dated bonds to ease the upward pressure seen in gilt yields as well as the falling pound…