The Irrational Leading the Exurberant

On October 23 Federal Reserve chairman Ben Bernanke renewed commitments to keep borrowing costs low, hoping investors might move into higher yielding assets in stocks and housing. Stock prices are expected to rise 3% and home prices by 2% in the next two years following the Federal Reserve’s announcement of Q3.  Mr. Bernanke plans to keep the benchmark short-term interest rate near zero through mid 2015 even if the economy improves. 

On the same day the Bank of Canada Governor Mark Carney told reporters in Ottawa that the Canadian economy is in an expansion not a recovery and the central bank’s key rate could be expected to increase in mid 2013.