Two senior Fed officials told the Financial Times in an article published on Saturday that while the Fed keeps interest rates low, stricter U.S. financial regulations are needed to avoid excessive market risk and the rise of asset bubbles.
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Eric Rosengren, chairman of the Boston Fed, told the newspaper that the Fed lacks adequate tools to prevent companies and households from taking on “excessive leverage”
“If you want to follow a long-term low interest rate monetary policy, you need a strong financial regulator to be able to limit too many risk-taking behaviors that occur simultaneously,” he was quoted as saying by the Financial Times.
Rosengren said: “(Otherwise) you are more likely to fall into a situation where interest rates may be low for a long time but backfire.”
Daly said that the US economy, Fed policy is in a “good position”
Minneapolis Federal Reserve Chairman Neel Kashkari (Neel Kashkari) said that stricter regulatory measures are necessary to avoid repeated intervention by the Fed in the market.
He told the newspaper: “I don’t know what the best policy solution is, but I know we can’t continue to do what we have been doing.”
He said: “Once there is a risk, everyone has to flee. The Fed must step in and bail out the market. This is crazy. We need to study it carefully.”
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A representative of the Federal Reserve Bank of Boston confirmed Rosengren’s speech in the Financial Times and added that he was interviewed on October 8.
(Reporting by Kanishka Singh; Editing by Sonya Hepinstall)