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Bubbles the Fed Can't Ignore

Jeremy Stein speaks in Washington on April 17
Jeremy Stein speaks in Washington on April 17Photography by Andrew Harrer/Bloomberg

The Federal Reserve is determined to keep interest rates super-low until the economy has fully recovered and people are back to work. But the central bank doesn’t want low, low rates to pump up dangerous asset bubbles by inducing investors to pursue higher yields.

Some markets have gotten so frothy lately that the Fed may be forced to tighten monetary policy earlier than it wants, just to keep bubbles from forming. That’s my takeaway from a story published today by Bloomberg News.