Markets Shift Focus: Inflation Concerns Fade — Policy Uncertainty Emerges as New Global Risk

Markets Shift Focus: Inflation Concerns Fade — Policy Uncertainty Emerges as New Global Risk

14 October 2025 | Global Strategy Desk

For nearly three years, global markets have traded based on one dominant narrative: inflation and interest rate risk. But ahead of tonight’s IMF World Economic Outlook (WEO) release, a new theme is rising rapidly through institutional research notes — “Policy Uncertainty Risk.”

Strategists at Goldman Sachs and BlackRock suggest that the era of trading purely on inflation data may be ending, replaced by a market regime driven by political gridlock, delayed budget approvals, and inconsistent economic responses from major governments, from Washington to Brussels to Beijing.

“It’s not inflation that scares the markets anymore — it’s indecision,” one analyst noted.
“Hesitation is the new volatility catalyst.”

With the U.S. still trapped in a partial shutdown, the European Union delayed on fiscal stimulus talks, and China sending mixed policy signals, capital flows are beginning to search for regions with faster decision-making and clearer policy direction — primarily Southeast Asia and India.

Gold prices, Asian equity flows, and currency positioning all show early signs of this shift.