Why the Fed is in 'serious danger of hubris'

Any decision on rates by the Federal Reserve this year could damage markets as the central bank's efforts have so far only resulted in lacklustre growth and 'bubble' asset prices, according to Jan Dehn, head of research at Ashmore.

Financial markets are sitting on a time bomb. Since 2008/2009, a massive rally in developed market assets has been predicated almost entirely on a large 'doubling down' of monetary policy, including zero interest rate policies and quantitative easing.  This enormous easing effort in effect extended an already 30-year period of monetary easing that had seen 10-year US treasury yields fall from 16% in the early 1980s, and had culminated in the 2008/2009 debt crisis.  The decision to respond to the debt crisis in 2008/2009 with further monetary easing – rather than monetary tightening as...