Fed officials call for tougher regulation to prevent asset bubbles: FT – Fox Business
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Tougher U.S. financial regulation is needed to avoid the rise of excessive risk-taking and asset bubbles in the markets at a time when the Federal Reserve is keeping interest rates low, two senior Fed officials told the Financial Times in an article published on Saturday.
Boston Fed President Eric Rosengren told the newspaper that the Fed lacked sufficient tools to prevent companies and households from taking on “excessive leverage” and called for a rethink on issues related to U.S. financial stability.
“If you want to follow a monetary policy … that applies low interest rates for a long time, you want robust financial supervisory authority in order to be able to restrict the amount of excessive risk-taking occurring at the same time,” the FT quoted him as saying.
“(Otherwise) you’re much more likely to get into a situation where the interest rates can be low for long but be counterproductive,” Rosengren said.
A representative of the Boston Federal Reserve confirmed Rosengren’s remarks made to the Financial Times, adding he was interviewed on Oct. 8. Kashkari was not immediately available to comment on the article published on Saturday.
(Reporting by Kanishka Singh; Editing by Sonya Hepinstall)