There are significant dangers in the US Fed's policy of delay with respect to interest rate rises, as savers are punished and bubbles form
There are significant dangers in the US Fed's policy of delay with respect to interest rate rises, as savers are punished and bubbles form. The Fed's latest comments on interest rates have been warmly greeted by the market and speculators, confident that the easy money scenario will continue to pump up the value of their artificially-inflated investments in shares and property for a considerable time. But there are significant dangers in maintain an ultra-low interest rate policy - they distort market prices, encourage destabilizing financial speculation, and they unfairly punish savers. It's also a very difficult process to unwind, as markets will eventually discover - and why the Fed is seemingly delaying the inevitable.
Gavin has been a senior resources analyst following the mining and energy sectors for the past 25 years, working with Intersuisse and Fat Prophets. He is also the Executive Director, Mining & Metals with Independent Investment Research (IIR).