I believe for the very first time, a Fed member is admitting that it was an artificially low fed funds rate that ‘helped create the housing bubble’ (I’m quoting Bloomberg). Voting member Lockhart just made the comment in a Q&A after a speech on the US economy. He took office as head of the Atlanta Fed in 2007 so he of course was not party to the Greenspan/Bernanke Fed that cut rates to 1% and left it there for one year. While I’d love to say ‘the first step to recovery is to acknowledge the problem,’ Lockhart went on to say a low rate policy will likely hold ‘for some time,’ today’s low rate is not repeating history and the low rate will not lead to a bad outcome. This time is different is always scary to hear, specifically so with Fed policy.
