The Federal Reserve's massive easing program might spark another global financial crisis, says Stephen Roach, a lecturer at Yale University and former chairman of Morgan Stanley Asia.
"Monetary accommodation, to the point of ignoring the stresses and strains of financial stability and what they mean for asset markets and credit markets, is something that needs to be seriously rethought," he tells
CNBC.
While the Fed has trimmed its bond purchases to $35 billion a month from $85 billion last year, the Fed's balance sheet is still more than $4.3 trillion.
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And the central bank's federal funds target rate has stood at a record low of zero to 0.25 percent since December 2008.
"As long as the Fed remains as wildly accommodative as a $4.25 to $4.5 trillion balance sheet would suggest, there is good reason to question the Fed's commitment to financial stability," Roach argues.
"And there is good reason to believe that we could, in the not too distant future, find ourselves in another mess. . . . The Fed does not seem all that concerned about the repercussions of quantitative easing."
Some experts say economic fundamentals will force the Fed to tighten its policy soon. "Our view is that the data will give them [the Fed] a window to do it [lift interest rates] sooner than people think," Rick Rieder, chief investment officer of fixed income at BlackRock, tells
The Wall Street Journal.
He says the Fed may boost rates as early as the first quarter of next year. Most economists don't expect a move until the second half of 2015.
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