Fed's Hoenig warns against rates staying too low too long

01/7/2010 | Financial Times (tiered subscription model)

Federal Reserve Bank of Kansas City President Tom Hoenig cautioned about the implications of keeping interest rates too low for too long. "Experience both in the U.S. and internationally tells us that maintaining large amounts of stimulus over an extended period risks creating conditions that lead to financial excess, economic volatility and even higher unemployment at some point in the future," Hoenig said. He disagreed with Fed Chairman Ben Bernanke's argument that keeping rates low was not a factor in the housing bubble. "Low interest rates contributed to excesses," Hoenig said.

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