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Is The Fed Is Behind The Wrong Curve?

June 29th, 2017 · No Comments

  • Debt to GDP ratios have kept on rising since the financial crisis in most of the world, in some parts at alarming rates.
  • While we wholeheartedly agree with the BIS that this is a dangerous development, we’re less sure about their diagnostic.
  • In essence, the BIS argues that the Fed is behind the wrong curve, steeped in Phillips curve thinking.
  • But we do not see a compelling case for laying the blame of low interest rates at central banks.
  • Nor do we think tightening in a weak economy to contain financial excesses is the right approach.

Source: Is The Fed Is Behind The Wrong Curve? | Seeking Alpha

Tags: Monetary policy