A series of “cascading shocks” have raised the risk of global financial instability to new levels, officials with the International Monetary Fund said Tuesday.

“It’s difficult to think of a time where uncertainty was so high,” Tobias Adrian, director of the IMF’s monetary and capital markets department, said at a press briefing on the IMF’s October 2022 Global Financial Stability Report.

“The kind of risk we are flagging is the highest, outside of acute crisis,” Antonio Garcia Pascual, deputy division chief of the IMF’s monetary and capital markets department, said at the briefing.

Since the IMF’s last report in April, risks overall have “significantly skewed” to the downside, the latest report said. The “storm clouds” looming over the global economy, including higher-than-expected inflation, more spillover from the Russian invasion of Ukraine and a slowdown in China, could lead to a severe downturn and heighten the risks of contagion and spillover to other markets, the report said. “As a result, the slowdown of the global economy has intensified,” it said.

As the Federal Reserve and other central banks try to restore price stability, their rate hikes have created a volatile and risky environment, the report stated.

Recent efforts by the Bank of England to curtail U.K. market turmoil for government bonds sparked by the government’s proposed “mini-budget,” through bond purchase programs and special lending facilities “are classic actions of central banks,” Mr. Adrian said.

“At this point we do not anticipate these kinds of measures being taken in other countries,” he said, although they could materialize if the report’s downside risk scenario comes into play.

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