Fed authorities call for stricter regulation to avoid asset bubbles: FT

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Fed authorities call for stricter regulation to avoid asset bubbles: FT




IMAGE FROM FILE. The president of the Federal Reserve Bank of Boston, Eric Rosengren, during a speech in New York, USA


© Reuters/Keith Bedford
IMAGE FROM FILE. The president of the Federal Reserve Bank of Boston, Eric Rosengren, during a speech in New York, USA


Oct 17 (Reuters) – Tighter financial regulation is needed in the United States to prevent increased risk-taking and asset bubbles in markets at a time when the Federal Reserve is keeping interest rates low, they said. two central bank authorities in an article published on Saturday by the Financial Times.

Boston Fed Chairman Eric Rosengren told the newspaper that the agency lacked sufficient tools to prevent businesses and households from assuming “excessive leverage” and called for a reconsideration of problems related to the country’s financial stability. .

“If you want to pursue monetary policy … that applies low interest rates for a long time, you want a strong financial supervisory authority to be able to restrain the excessive amount of risk-taking that occurs at the same time,” he was quoted as saying. FT.

“(Otherwise) you are much more likely to get into a situation where interest rates can be low for a long time but backfire,” Rosengren said.

Minneapolis Fed Chairman Neel Kashkari said stricter regulation is needed to prevent repeated central bank intervention in the market.

“I don’t know what the best monetary policy solution is, but I know that we cannot continue doing what we have been doing,” he told the newspaper.

“As soon as a risk arises, everyone runs away and the Federal Reserve has to step in and rescue that market, and that’s crazy. And we have to analyze it carefully,” he said.

Neither Rosengren nor Kashkari were immediately available to comment on the article published on Saturday.

(Report by Kanishka Singh, Edited in Spanish by Manuel Farías)

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