Glenn Stevens has faced the dilemma confronting central bankers across the developed world: that low interest rates put in place to deal with low inflation, the threat of deflation, or tepid economic growth, run the risk of causing dangerous asset price bubbles that threaten financial stability.
He’s well aware of the risks; Stevens has publicly questioned the extreme low interest rate policies being pursued by central banks overseas because of their impact on retirement savings.
He has also argued repeatedly that monetary policy has been left to shoulder too much of the burden of stimulating the economy, calling for fiscal policy to take a greater role through government investment in long run assets that can benefit the economy.
Glenn Stevens is no Alan Greenspan: the former US Federal Reserve chairman, hailed as a “maestro” in office then exposed as a bubble man, whose low interest rate policies and failure to perceive the risks being run up by banks led to the US housing market catastrophe.
But if the private debt bubble bursts and it all ends badly, it will similarly taint Mr Stevens’ legacy.
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