US Fed Considers Lessons From Financial Crisis

Posted October 18th, 2011 at 3:10 pm (UTC-5)
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The head of the U.S. central bank says the financial crisis shows that governments may need to do more to fight financial bubbles.

The collapse of inflated housing prices played a key role in sparking the economic downturn that began in 2008.

U.S. Federal Reserve Chairman Ben Bernanke told an audience in Boston Tuesday that prior to the crisis, many at the central bank thought it was more important to manage interest rates than focus on keeping the financial system stable.

The Fed has cut interest rates to bolster economic growth and has raised them in the past to fight inflation.

But the chaos that followed the housing bubble is making economists rethink this policy.

Bernanke says economists may also reconsider the ways they analyze macroeconomic and financial issues.