BIS - Low Interest rates could make world economy unstable
Adam Pike, News Editor
30 Jun 2014, 10:41 a.m.
The Bank for International Settlements (BIS) has warned central banks across the globe that ultra-low interest rates could lead to massive imbalances in the world economy and encourage consumers to take on too much debt.
BIS Chief Jamie Caruana added, “If rates persist at this level, it will create a highly undesirable combination of high debt, anaemic growth and poor productivity.” Debt levels in the worlds developed economy now stands at 275% of GDP.
Caruana also believes stock markets are over confident and have become detached from the reality of a weak economy and ongoing political tensions in the Ukraine and the Middle East
The BIS is recommending that governments should start to reduce debts, rebalance their economies and raise interest rates instead of relying on cheap money to stimulate the economy.
The BIS believes if policymakers don’t change course the world economy runs the risk of another full blown economy crises.