Bernanke May Use Rates to Pop Bubbles
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Federal Reserve Chairman Ben S. Bernanke said he doesn't rule out using monetary policy to pop asset-price bubbles, while stressing that financial regulation is his preferred approach.
"Supervision, regulation of the financial system is the strongest, most effective" way to deal with bubbles, he said in response to a question at a Senate Banking Committee hearing considering his nomination to a second term. "I do not rule out using monetary policy if necessary, if that situation does become worrisome and threatening."