London: Stricter US financial regulation needed to avoid rising risk aversion and asset markets at a time when the Federal Reserve keeps interest rates low, two senior Fed officials told the Financial Times in a article published Saturday. .
Boston President Eric Rosengren told the newspaper that the Fed did not have enough tools to prevent businesses and households from adopting ‘excessive leverage’, and called for reconsideration of issues related to the US financial sector. stability.
“If you want to pursue a monetary policy … that applies long-term low interest rates, you want a robust financial supervisory authority to be able to limit the amount of excessive risk-taking at the same time,” the FT quoted him as saying.
“(Otherwise) you are much more likely to get into a situation where interest rates can be low for a long time but can be counterproductive,” Rosengren said.
Minneapolis Federal Reserve President Neel Kashkari said stricter regulations were needed to prevent the Fed’s repeated market interventions.
“I do not know what the best policy solution is, but I know we can not just keep doing what we have done,” he told the newspaper.
‘Once there’s a risk of it hitting, everyone flees and the Federal Reserve has to step in and save the market, and that’s crazy. And we have to look into it carefully, ”he said.
A Boston Federal Reserve spokesman confirmed Rosengren’s remarks to the Financial Times, adding that he was interviewed on October 8. Kashkari was not immediately available for comment on the article published on Saturday.
Source: Gulf News