The European Central Bank's ultra easy monetary policy may be fuelling asse...
FRANKFURT - The European Central Bank’s ultra easy monetary policy may be fuelling asset bubbles, which may in turn trigger future crises, ECB board member Yves Mersch said on Monday, providing an unusually stark warning about the risks of ultra low rates.
“Vigilance is particularly warranted in the light of some signs that monetary policy is encouraging increased risk-taking and contributing to elevated asset price inflation and income inequality,” said Mersch, a policy hawk who has criticized easy policy in the past. Tightening monetary policy to cool asset prices would reduce the likelihood and severity of financial crises but comes at a cost of below-target inflation, Mersch argued.
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