Are Central Banks Responsible For Asset Bubbles?

  • Many assume central banks are the main culprit for creating asset bubbles by running too loose monetary policy.
  • However, central banks are not in control of longer-term interest rates and these have been on a downward trajectory for a couple of decades. We look at what’s behind this.
  • The fact that central banks aren’t the main culprit creating asset bubbles doesn’t mean they are helpless in preventing (or at least moderating) them.
  • But that comes at a significant cost which so far few central banks are willing to assume.

What If Central Banks Aren’t Responsible For Asset Bubbles? | Seeking Alpha