Explanations other than asset price bubbles may be behind the rallies in several asset markets, according to the Federal Reserve Bank of Richmond.
“There are some economic factors that may initially appear to have fueled these rallies. Most notably, monetary policy is accommodative in the United States due to both very low interest rates and quantitative easing,” the Fed said. “This means many developing nations also have pursued easy monetary policies since they officially or unofficially fix their currency to the dollar. Other developed countries, too, currently have easy monetary policies.”