Fed Seems Resigned to Bubble Risk in Effort to Extend Expansion

 

• Some Federal Reserve policymakers seem resigned to running a heightened risk of asset bubbles and other financial excesses as they seek to keep the economic expansion going.
• That’s one of the messages tucked inside the minutes of the Federal Open Market Committee’s March 19-20 policy-making meeting.
• “A few participants observed that the appropriate path for policy, insofar as it implied lower interest rates for longer periods of time, could lead to greater financial stability risks,’’ according to the minutes, published April 10.
• The last two expansions ended not in a burst of inflation, but in financial froth, first a dot-com stock market boom, then a housing bubble.

(Source: Bloomberg