The Business Times
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PERSPECTIVE

Cheap money’s distortions remain, not least in life insurance

As the US Federal Reserve cuts rates, markets are rallying – but there are long-term risks from experiments

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    • With private equity groups moving into the insurance sector, there are worries that when interest rates rise in the future, or a slowdown occurs in the private capital world, unexpected losses could emerge that would create a domino effect.
    • With private equity groups moving into the insurance sector, there are worries that when interest rates rise in the future, or a slowdown occurs in the private capital world, unexpected losses could emerge that would create a domino effect. ILLUSTRATION: PIXABAY

    Gillian Tett

    Published Fri, Sep 20, 2024 · 05:05 PM

    ARE we back to “normal”? That is a question many investors might now ask, after the US Federal Reserve cut interest rates by a whopping 50 basis points this week.

    After all, ever since the 2008 crisis, finance has been in a deeply abnormal state. First, central banks slashed rates to stave off depression, then they doubled down when the pandemic hit – before finally raising in panic when inflation exploded.

    Now the Fed is cutting rates in response to slower growth. This looks more like the pre-2008 financial cycles. No wonder markets are rallying in relief.

    PerspectiveUS Federal ReserveInsurance

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