Indeed, the longer interest rates are kept at low levels, the greater is the incentive provided to investors to hold long term assets, possibly leveraging with carry trade, and the greater the capital loss occurring when rates are eventually raised. The potential future costs often do not receive appropriate weight in the policy considerations.
Another less obvious outcome of a hesitant and belated removal of policy accommodation is that it could set in motion a chain of events that will ultimately create new financial imbalances with potentially high risks for price stability and for the economy as a whole.