, Columnist
Fed Policies Aren't Distorting Asset Prices
The notion that higher interest rates were “normal” while current ones are “unnaturally” low is false.
Fed Governor Lael Brainard.
Photographer: Mark Kauzlarich/BloombergThis article is for subscribers only.
The Federal Reserve’s low interest rate policy and quantitative easing have distorted financial markets. At least, that appears to be the conventional wisdom on Wall Street, eagerly embraced at the very top of the industry to serve as the basis for investing decisions.
But what if this hypothesis is incorrect? Then the conventional wisdom becomes pernicious and generates nothing but costly investment mistakes.