Bubbles could attract KiwiSaver fly-by-nighters

At the Tower Investments quarterly media briefing today, Stubbs said governments were engaging in "financial repression" by keeping interest rates artificially low.

While this tactic gave the governments more "headroom" to try and sort out their shaky finances, it punished savers and risked creating high levels of inflation, he said.

Asked by Good Returns whether there was also a risk of creating market bubbles such as the tech bubble and the more recent housing bubble, Stubbs said that was a definite possibility if interest rates were kept too low for too long.

"Artificially low interest rates create distortions in the investment market," he said.