The Federal Reserve’s July rate cut has added to the divergence of US equity prices from their underlying earnings, US economist Robert Shiller says.

The Nobel Prize-winner says the near decade-long bull market has been driven by the idea, or the “economic narrative”, that low interest rates will persist. The Fed’s recent interest rate cut supports this narrative, he says, in the sense it could be viewed as the end to its normalisation of rates.

“The rising of rates over the past few years in