The Bank for International Settlements in Basel just launched a warning shot that all should pay attention to. From the WSJ:
The Bank for International Settlements delivered a stern message to central banks and governments that keeping interest rates low for too long, or failing to act quickly to cut budget deficits, could sow the seeds for the next crisis.
"The time has come to ask when and how these powerful measures can be phased out," the BIS said in its annual report, referring to large fiscal and monetary stimulus measures initiated to lift economies out of recession.
The warning amounts to a direct challenge to the European Central Bank and U.S. Federal Reserve, the world's dominant central banks, both of which have held their main lending rates at record lows for more that a year. Neither central bank is expected to begin raising rates until well into 2011 due to continued pressures in the financial system.
See the whole piece here.