Bubbles or no bubbles, that is the question.
(Bloomberg) — Federal Reserve staff members gave a potentially more worrisome assessment of the risks to financial stability in the central bank’s policy meeting last month than the one presented publicly by Chair Jerome Powell.
Speaking to reporters on Jan. 27 after the Fed’s last policy making meeting, Powell called financial stability vulnerabilities overall “moderate.” Central bank staff gave a less sanguine assessment in their presentation at the January meeting, telling policy makers that vulnerabilities on balance were “notable,” according to the minutes of the gathering released on Wednesday.
The Fed is currently buying $120 billion of assets per month — $80 billion of Treasuries and $40 billion of mortgage-backed securities — and has pledged to maintain that pace until it makes “substantial further progress” toward its goals of maximum employment and 2% inflation.
Up, up and away. I was tempted to link to The Fifth Dimension song of the same name, but I never liked that song.
You can see why Fed staffers are not as upbeat about financial markets risks as Powell. Particularly since Powell is eyeing maximum employment and 2% inflation.
US home and commercial real estate prices are also going up, up and away.
I wonder if the Fed staff sees soaring cryptocurrencies like Ethereum and Bitcoin as a problem (aka, asset bubble).
Here is Fed Chair Jay Powell enjoying a PBR with his Fed staff discussing the perilous nature of asset bubbles.