By Kristina Cooke – Federal Reserve Chairman Ben Bernanke said on Tuesday that central banks may need to resort to monetary policy to combat asset bubbles, although regulation should be a first line of defense.
Despite an aggressive easing of monetary policy by the Fed, the U.S. economy continues to suffer from the effects of a burst real estate bubble.
Economists have long debated whether central banks should prick perceived asset bubbles when they are forming. Before the financial crisis, most central bankers, Bernanke included, argued against using interest rates to lean against bubbles. more> http://tinyurl.com/6jk9ftd
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