ECB Warns Investors Underestimate War, Inflation Risks; Assets Remain Overvalued on May 27

GateNews
According to Jin10, on May 27, the European Central Bank released its Financial Stability Review warning that investors may be underestimating geopolitical threats including potential Iran conflict and inflation risks. The ECB stated that despite recent market adjustments, asset prices remain "elevated" compared to historical levels. ECB Vice President Klaas Knot noted that such underestimation makes markets vulnerable to sharp repricing, with non-bank financial institutions potentially amplifying volatility. The report highlighted rising hedge fund activity and fiscal sustainability concerns in certain countries as risks that could trigger sudden repricing of risk assets.
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