THIS is the key valuing stocks right now: Buffett

Billionaire Warren Buffett said Monday the stock market would be viewed as "cheap" now if interest rates continued to remain low.

"If these interest rates were to continue for 10 years, stocks would be extremely cheap now," the chairman and CEO of Berkshire Hathaway (NYSE:BRK-A - News) told CNBC's " Squawk Box " Monday-following Berkshire's annual shareholder meeting on Saturday.

If rates normalize, stocks would be on the high side on a valuation basis, he said.

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Stocks are cheaper than bonds, he added-saying bonds are "very overvalued" right now.

That said, the Federal Reserve has done the right thing with easy monetary policy, Buffett examined.

The U.S. central bank ended its latest round of bond purchases last year and now policymakers appear to be on the brink of their first rate hike in nearly a decade. Many economists believe for now September is the most likely date for liftoff.

Buffett said he has no idea when the Fed might move. "They've fooled me so far. So I've been wrong," he said. "I would have thought by now you would have seen much higher rates than we have now, which is essentially nothing."

He added that the Fed should stay low as "Europe keeps following the present policies." The European Central Bank has initiated a Fed-style quantitative easing bond-buying program to help boost the euro zone economy.




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