Here’s an opinion piece from Rick Rieder. BlackRock is the world’s largest asset manager with $4.401 trillion in assets under management. Rick is BlackRock’s Chief Investment Officer of Fundamental Fixed Income, Co-head of Americas Fixed Income and a member of the company’s Global Operating Committee.
He gives 5 reasons why the Federal Reserve’s excessively low rates may be harmful to the economy, and that may actually be inhibiting U.S. economic growth and job creation:
- Older workers are delaying retirement and staying in the workforce. Excessively low rates are making it expensive for individuals to retire
- Companies can’t gauge the true level of U.S. economic growth so they’re holding off on committing capital… persistently easy policy has masked organic economic conditions, making it difficult for company leaders to gauge the true level of U.S. economic growth
- Companies are taking advantage of extremely easy corporate financing conditions at the expense of reinvesting in organic business growth
- Inflation emanating from building wage pressure may be more difficult to contain than the Fed anticipates
- Capital is being misallocated. Finally, unconventional monetary policy of recent years has encouraged significant bouts of capital misallocation, resulting in crowded trades, correlated risks and the overly stretched valuations seen in markets today
Reider argues more fully at his blog post, here, and its worth a read.
