Fed Rate Hike- Risks of waiting too long

The Fed continues to push out policy normalization, if not in terms of timing then certainly in terms of the speed. 

As noted earlier, the Fed now indicates that it will undershoot neutral rates for at least three more years, and is adopting an even more market friendly policy stance. 
While this seems appropriate in the context of low inflation and weak external demand, it does increase the risk for future financial stability. 

Societe Generale notes its views on Thursday...

• When asked about asset price valuations today, Chair Yellen acknowledged that equity valuations are on a high side (though not outside of historical ranges) and that in some corporate debt markets we dosee evidence of unusually low spreads. 
  
  
• But she countered that there is no evidence of excessive credit growth, excessive leverage or excessive maturity transformation. 
  
  
• She concluded that the threats are moderate at this point. In other words, the Fed needs to see a lot more risk taking before it becomes concerned.