| NEW YORK, July 16
NEW YORK, July 16 Billionaire investor Stanley
Druckenmiller took another swipe at U.S. central bank policies
on Wednesday, warning that continued low interest rates were too
risky and could create fresh problems in the years ahead.
"Today's Fed policy seems not only unnecessary but fraught
with unappreciated risk," said Druckenmiller, who has studied
central bank policies for decades, made billions with bets on
currencies and interest rates and averaged annual compounded
investment returns of 30 percent.
"I'm not even sure it's going to end badly," said
Druckenmiller, who helped billionaire investor George Soros earn
$1 billion by betting against the British pound in 1992.
"What I am sure is they're making a bad bet, a bad risk
reward," he added.
Speaking in characteristically blunt terms at the CNBC
Institutional Investor Delivering Alpha Conference,
Druckenmiller said he worried that the Fed's easy-money policies
would have negative consequences.
"I really hope I am wrong in my assessment, I really do ...
The problem is the Fed is making a bet from which their
adjustment could be way too late and have significant adverse
consequences," he said.
The negative effects were already being seen in the initial
public offerings market, he said, adding that current policies
were encouraging investors to take riskier bets.
While Druckenmiller said easy-money policies were critical
to stabilizing the economy after the financial crisis, sticking
with them now was a mistake.
"We should be debating why we haven't moved more
meaningfully toward a neutral Fed funds rate," Druckenmiller
"Frankly, I don't know what it is in their forecasting
record that makes them confident," Druckenmiller said, one day
after Federal Reserve Chair Janet Yellen said that labor markets
were not healthy yet. She signaled that the Fed will keep
monetary policy loose until hiring and wage data showed the
effects of the financial crisis were completely gone.
"I'm not even sure it's going to end badly. What I am sure
is they're making a bad bet, a bad risk reward."
Druckenmiller, 61, closed down his Duquesne Capital
Management in 2010 and said he no longer had the guts to make
the kind of super-sized bets he made during his career.
(Reporting by Svea Herbst-Bayliss; Editing by Jeffrey Benkoe)