From Reuters today:
WASHINGTON (Reuters) – A senior U.S. Federal Reserve official said on Tuesday that an extended period of ultra-low interest rates invites speculative behavior and is risky. “When you have zero rates that go on indefinitely, you are inviting future problems,” Kansas City Federal Reserve Bank President Thomas Hoenig said in an interview on CNBC. “We know that zero is non-sustainable … the market already knows that,” Hoenig said. Hoenig, who is voting this year on the Fed’s policy-setting committee, is one of the more vocal anti-inflation hawks among policymakers. He dissented at the Fed’s January meeting on the issue of maintaining a pledge to hold rates exceptionally low for an extended period, arguing the economy had improved sufficiently to drop the language. The Kansas City Fed chief said the Fed should be ready to raise rates, even with unemployment above 9 percent. “Removing and exiting these … quantitative easing effects is not tight policy. It’s removing very substantial easing policy,” he said.
Sure, they are sustainable! Anything is possible in cartoon world!