Some officials in Asia are ... suggesting the Fed’s record-low federal funds rate -- the central bank’s interest-rate target for overnight loans between banks -- is pushing asset prices in their region too high...Emphasis mine.
Continuing the zero-rate policy may lead emerging economies “to overheat and experience financial turmoil,” Bank of Japan Governor Masaaki Shirakawa said in Tokyo Nov. 16...
Asian policy makers, including officials from India, South Korea and Indonesia, are studying capital controls to limit “hot money” inflows that may stoke asset bubbles and force their currencies to appreciate. Indonesia’s central bank is “seriously” studying a limit on inflows to short-term bills, Senior Deputy Governor Darmin Nasution said Nov. 19. Taiwan last week banned international investors from placing funds in time deposits.
The U.S. shouldn’t adjust monetary policy to account for rising Asian assets, Federal Reserve Bank of St. Louis President James Bullard said Nov. 18. “If there are problems in real- estate markets in Asia, it is not very practical to say you should raise interest rates in the U.S.,” he said.
Now that's Smart Diplomacy™!