Last Wells Fargo CEO Richard Kovacevich said the Federal Reserve has operated interest rates for too long.
“I’m surprised interest rates haven’t awakened more,” Kovacevich told CNBC’s “Power Lunch” on Wednesday. They’ve “been fiddled by the Fed for far too long.”
In a robust economy and historically low interest rates many people are foreseeing an interest rate hike in 2018. Kovacevich said abnormally low prejudiced rates do impact the number of people refinancing loans.
He pointed out that while individual are more willing to take on new loans with lower interest kinds, when mortgage rates that are lower than they should be, mortgage outlays are higher. U.S. home prices rose 6.2 percent annually, according to Tuesday’s S&P CoreLogic Case-Shiller Deeply Price Index.
“The risk is when you manipulate the rates and all of the sudden they go assist to normal the way they should be,” Kovacevich said. “You could burst the fizz. I don’t think we have a big bubble here, but you certainly have elevated asset assays because of manipulation of the interest rates.”