Buffett lauds Fed, warns of unintended effects

Associated Press

OMAHA, Neb.

Investor Warren Buffett said the Federal Reserve and other policymakers are generally doing a good job, but it’s difficult to predict all the effects of interest rates remaining low for this long.

Buffett said Monday on CNBC that no one can predict the effects of prolonged low rates because it never has happened before, but the U.S. economy has substantially recovered from the depths of the recession in 2008.

“Very few people in 2009 would have dreamt that we could have this duration of low rates,” Buffett said.

But policymakers do have to be careful not to raise U.S. interest rates too far ahead of Europe and Japan because of unintended consequences of the imbalance, Buffett said.

Buffett spent more than five hours answering questions at Berkshire Hathaway’s annual meeting Saturday. Berkshire Vice Chairman Charlie Munger and board member Bill Gates joined Buffett for part of the CNBC interview.

Munger said he thinks U.S. policymakers should have invested more in infrastructure to invigorate the economy after the recession instead of relying so much on fiscal policy.

“I strongly suspect that it was massively stupid for our government to rely so heavily on printing money and so lightly on fiscal stimulus for infrastructure. I think that happened by accident because our politicians couldn’t agree,” Munger said.

Buffett estimates roughly 40,000 people attended the shareholders meeting for the conglomerate he leads. So this year’s addition of a webcast of the meeting didn’t result in a significant drop in attendance from last year’s crowd that was close to 45,000.

Buffett said choosing the next president will be important for the world, but it won’t derail the U.S. economy.

“Electing the wrong president won’t damage the U.S. economy,” said Buffett, who supports Democrat Hillary Clinton.