LONDON, June 19 (Reuters) – The Bank of England set out details on Friday of the scenario against which it is testing the resilience of private markets to a severe global economic shock.
The scenario is based on an unspecified geopolitical shock which disrupts the supply of technology hardware components and leads to a “deep global recession” and much higher unemployment and inflation, causing the British economy to shrink by 4% and the BoE to raise interest rates to 7%.
The BoE said the scenario – like others in previous stress tests – does not represent a prediction of what it thinks is likely to happen to the world economy.
(Reporting by David Milliken; editing by William James)
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