Libertarian_Guard
29th June 2014, 09:00 PM
The Bank for International Settlements (BIS) has warned that ultra-low interest rates have lulled governments and markets "into a false sense of security".
The Basel-based organisation - usually dubbed the "central banks' central bank" - urged policy makers to begin to normalise rates.
"The risk of normalising too late and too gradually should not be underestimated," the BIS said.
"Growth has disappointed even as financial markets have roared: The transmission chain seems to be badly impaired," the BIS said.
It said policy makers should take advantage of the current upturn in the global economy to reduce the emphasis on monetary stimulus.
'Behind the curve'
And it warned that taking too long to do this could have potentially damaging consequences, by encouraging investors to take too much risk.
"Over time, policies lose their effectiveness and may end up fostering the very conditions they seek to prevent," it said.
"The predominant risk is that central banks will find themselves behind the curve, exiting too late or too slowly," it added.
The BIS was founded in 1930 and is the world's oldest international financial institution.
Its 60-strong membership includes the Bank of England, the European Central Bank, the US Federal Reserve, the People's Bank of China and the Bank of Japan.
http://www.bbc.com/news/business-28081771
The Basel-based organisation - usually dubbed the "central banks' central bank" - urged policy makers to begin to normalise rates.
"The risk of normalising too late and too gradually should not be underestimated," the BIS said.
"Growth has disappointed even as financial markets have roared: The transmission chain seems to be badly impaired," the BIS said.
It said policy makers should take advantage of the current upturn in the global economy to reduce the emphasis on monetary stimulus.
'Behind the curve'
And it warned that taking too long to do this could have potentially damaging consequences, by encouraging investors to take too much risk.
"Over time, policies lose their effectiveness and may end up fostering the very conditions they seek to prevent," it said.
"The predominant risk is that central banks will find themselves behind the curve, exiting too late or too slowly," it added.
The BIS was founded in 1930 and is the world's oldest international financial institution.
Its 60-strong membership includes the Bank of England, the European Central Bank, the US Federal Reserve, the People's Bank of China and the Bank of Japan.
http://www.bbc.com/news/business-28081771