Just hours before US president Barack Obama arrived in China, the country’s chief banking regulator said the US was fuelling “speculative investments” and endangering global recovery through loose monetary policy.
Hours after the president landed, Ben Bernanke, US Federal Reserve chairman, said he did not think new asset price bubbles were forming in the US. Who is right? Near-zero interest rates in dollars are one reason for the rush for higher-yielding assets, from US and European stocks to emerging market equities to corporate bonds and commodities. Indeed, creating demand for risky assets is part of the point.
