Citi Chief Economist Fears “Financial Froth” But Thinks “Fed Tightening Is No Big Deal”

There are few entertaining economists, and fewer still work on Wall Street. Willem Buiter, the chief economist of Citigroup, is one of them. He is not only entertaining, but also outspoken – and his analysis of key economic trends and themes is second to none.
The Epoch Times spoke with Buiter about Federal Reserve (Fed) interest rate policy and the surprising strength of the euro, as well as the impossibility of a Chinese soft landing.
The Epoch Times: What is the Fed up to?
Willem Buiter: Well, there is very little tightening. The Fed has been raising its policy rates, unlike most of the central banks, who’ve been keeping them constant or are still cutting. But in real terms, policy rates are no higher now than they were before – maybe slightly less expansionary than they were, but there’s very little restraint.
You have the anticipation of balance sheet shrinking being announced probably in September. But that itself is not a major issue for markets in the most liquid assets in the universe.

This post was published at Zero Hedge on Aug 14, 2017.