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Global banking and financial markets are calm with low volatility as central banks have begun easing interest rates after bringing inflation back to near target, the IMF said as it launched its Global Financial Stability Report April 2025. However, the report indicates financial stability risk has now increased.

“Our assessment is that the global financial stability risk has increased significantly due to heightened economic policy uncertainty and rising market volatility,” said IMF Financial Counsellor Tobias Adrian. “The decline in investor confidence that we have seen has triggered recent sell-offs in equity markets. The tightening of global financial conditions is putting downside pressure on economic activity.”

Meanwhile, in its new World Economic Outlook report, the IMF has lowered its projections for global growth, citing trade and tariff uncertainty and risk to financial markets. From its estimated global average GDP growth rate of 3.3% in 2024, IMF projects growth to moderate to 2.8% in 2025 and slightly recover to 3% percent in 2026.

IMF said a likely further tightening of global financial conditions could adversely impact currencies, asset prices, and capital flows to emerging markets.