One of the more interesting snippets of information to come out of the minutes of the February meeting of the Reserve Bank Board was an acknowledgement by members of the risks generated by a low-rate environment and, in particular, those “linked to higher leverage and asset prices, particularly in the housing market”.
The share market has been described by Warren Buffett as a “manic depressive”. The same can be said of financial markets generally I reckon, and it’s certainly been evident lately. Just a year ago investors were worried about depression and deflation with bond yields and share markets plunging and now they are worried about overheating and inflation with bond yields rising rapidly and causing agitation in share markets!
