Fed rate hike didn’t ease financial pressures

Published



One of the main arguments for the Federal Reserve to raise interest rates and deflate financial bubbles lost some of its strength Monday with the release of government research that found that the December rate increase didn’t ease pressure for investors to take excessive risks.

The Office of Financial Research, an agency within the Treasury Department charged with identifying potential threats to the financial system, on Monday flagged the low long-term interest rate environment as an area of concern. Facing low returns on bonds, investors are forced to seek profits, or “reach for yield” by betting on riskier assets, the report warned.

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