Could an AI bubble blow up the economy?

Rate cuts are on the horizon, but interest rates are emphatically not returning to zero any time soon. In one sense, this is positive. Paul Dales, chief UK economist at Capital Economics thinks that “a new era of higher interest rates will probably go some way to prevent new financial imbalances from forming”. This could mean that bubbles in housing and credit are less likely over the years ahead – good news given their place at the very crux of the economy.

You might also think that this would make stock market bubbles less likely too. After all, when interest rates are higher, investors don’t need to take on as many risks in their search for returns, even if the performance of US shares and cryptocurrencies in the past year may act as a counter-argument here.