Rate hike will remove uncertainty & distortion, says JP Morgan chairman
There has been too little debate about the cost of staying too long with negative real interest rates
Singapore
THERE is too much public debate about the cost of exit from a zero interest rate policy and too little debate about the cost of staying too long with negative real interest rates, according to Jacob Frenkel, chairman of JP Morgan Chase International.
Delivering the keynote address at the second Asian Monetary Policy Forum on Friday, Dr Frenkel pointed out that prolonging ultra-low interest rates would distort the allocation of resources and encourage asset price bubbles. "The fear of normalisation (of monetary policy) should be balanced against the fear of the lack of normalisation," he said.
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Central banks will probably only cut half as much as they hiked