“We should not underestimate the risk of an extended period of zero interest rates and the accompanying incentives that may lead to future financial imbalances,” George said on April 4 in El Reno, Oklahoma. “Such imbalances could unwind in a disruptive manner and cause the labor market recovery to stumble.”
George Dissents
George’s comments reflected her dissents this year in her first votes as a FOMC member.
The BOE’s Miles, along with Paul Fisher and Governor Mervyn King, voted to increase bond purchases by 25 billion pounds ($38 billion) in March, though were defeated by the remaining six members of the Monetary Policy Committee, who voted for no change. The MPC majority said there was a risk of adding to stimulus at a time when the inflation rate remains above the BOE’s 2 percent goal.
The MPC also kept its bond-purchase target unchanged this month, at 375 billion pounds ($576 billion). The minutes of that meeting will be published on April l7, a day after March inflation data. Consumer-price growth accelerated to 2.8 percent in February.
The U.K.’s FTSE 100 Index has increased 8.3 percent this year, and last month reached its highest level since 2007. The index yesterday fell 0.5 percent to 6,384.39.
Lars E.O. Svensson, deputy governor at Sweden’s Riksbank, said the purpose of unconventional policy tools is to lower yields, bolster asset prices and encourage more risk-taking. Svensson has argued for deeper rate cuts than his fellow members of the Riksbank’s executive board, in order to lower unemployment in the Nordic region’s largest economy.
“There’s probably too much risk-aversion and too little risk-taking,” he said today at the Boston Fed forum.