The United States has kept its interest rates too low and is to blame for speculation in the world's markets that may be creating asset bubbles, says China's chief banking regulator Liu Mingkang.
Low rates and the dollar’s slide have “seriously affected global asset prices, fueled speculation in stock and property markets, and created new, real and insurmountable risks to the recovery of the global economy, especially emerging-market economies,” Liu said, according to a Bloomberg report.
“The continuous depreciation in the dollar, and the U.S. government’s indication that, in order to resume growth and maintain public confidence, it basically won’t raise interest rates for the coming 12 to 18 months, has led to massive dollar arbitrage speculation,” said Liu, who is chairman of the China Banking Regulatory Commission.
Fed Chairman Ben Bernanke has said rates will stay low for an “extended period” until economic recovery is fully underway.
China, meanwhile, has kept its own monetary policy loose, fueling concerns that assets bubbles are swelling there.
The United States wants China to strengthen its currency as well, as a weaker yuan encourages more imports from China and widens U.S. deficits.
“The rising trade deficit is an ominous sign for an economic recovery anytime soon,” Scott Paul of the Alliance for American Manufacturing told the Associated Press.
Treasury Secretary Timothy Geithner has said the United States is committed to a strong dollar.
The greenback, however, remains weak, which boost U.S. exports abroad but makes nations holding U.S. debt nervous over the future of their investments.
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