Geopolitical risks have surpassed economic volatility as the primary concern. Three-quarters of respondents cited trade war escalation as the top threat, followed by 51% who flagged heightened military conflict risks. Economic risks, including business cycles and inflation, ranked third. Reserve managers are also increasingly concerned about asset price volatility, rising US rates and the weaponisation of FX reserves — now cited by 49% of respondents, up from 32% in 2024 and just 14% in 2023.
Central banks are increasingly re-evaluating their reserve management strategies as macroeconomic pessimism and geopolitical risks dominate the global landscape. The 31st UBS Annual Reserve Manager Survey, conducted between May and June 2025 with responses from nearly 40 central banks, reveals a marked shift in sentiment towards greater caution, diversification and asset realignment.
Expectations of a soft economic landing have weakened. Only 39% now view it as the most likely outcome, down from 66% last year. An equal proportion now foresee stagflation, a situation of low growth coupled with persistent inflation, as a probable base case. Some 40% of respondents expect US headline inflation to remain in the 3–4% range over the next year, while 83% see US policy rates remaining in that same range. Longer-term inflation is also expected to persist, with 63% of central banks indicating that they believe higher inflation is now a structural feature of the global economy.
