According to Fed, Super-Low Rates Could Lead to a Speculative Bubble
In an effort to fuel the nation’s economic recovery, super-low interest rates are not expected to be strong enough to decrease the unemployment rate, and according to the Fed, could feed a new speculative bubble. Not only could record-low interest rates lead to excessive risk-taking in the financial markets, but they could also cause consumers, investors and businesses to worry about inflation taking off. In early November, Fed Chairman Ben Bernanke kept the target range for its bank lending rate at zero to 0.25 percent for an “extended period of time” to stimulate economic recovery. Even with low rates, the…