NEW YORK Feb 22 Federal Reserve Chairman Ben
Bernanke downplayed worries the U.S. central bank's monetary
policy has fueled asset bubbles that could hurt the economy in a
meeting with bond dealers and investors in early February,
Bloomberg reported on Friday.
Bernanke expressed his view in a private meeting with the
Treasury Borrowing Advisory Committee, Bloomberg said, citing
three people with knowledge of the discussions.
The committee advises the government on how to raise money
in the debt market.
Bernanke brushed off the risks of asset bubbles after
participants at the meeting raised concerns about farmland
prices, growth of mortgage real estate investment trusts and
falling yields on junk bonds as possible signs of asset bubbles,
according to Bloomberg.
Fed spokeswoman Michelle Smith declined to comment when
asked about the Bloomberg report.
Asset bubbles occur when excessive speculation overheats
prices on investments, including stocks and housing. When they
burst they can damage the economy.
Minutes of the Fed's Jan. 29-30 policy meeting released on
Wednesday showed some officials expressed concerns the Fed's
current bond purchase program "could foster market behavior that
could undermine financial stability."
The Fed has been buying a combined $85 billion a month in
Treasuries and mortgage-backed securities as a part of its
quantitative easing policy with the goal to reduce unemployment.
Wall Street stocks fell on Wednesday and Thursday as
investors sold their holdings on worries the Fed might reduce or
stop its bond purchases earlier than previously thought. The
Standard & Poor's 500 index lost 1.9 percent, its biggest
two-day drop since early November. The index was
up 0.4 percent on Friday in midmorning trading.