Beware investment's theory of relativity

The stakes are clearly high for policy makers who fret rate increases will derail the economic recovery. But in financial markets, complacency about risk appears to be reaching worrying levels

The battle lines have been drawn.

On one side is the Bank for International Settlements, sounding the alarm that zero interest rates are encouraging financial market euphoria. On the other are central banks like the US Federal Reserve and the Bank of England that insist that traditional monetary policy is too blunt a tool to use to tame investor enthusiasm for risk.

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