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Federal Reserve chairman Ben Bernanke has aggressively defended claims that low interest rate policies across the globe resulted in the last housing bubble.
In a speech to the American Economic Association’s annual meeting in Atlanta, Mr Bernanke blamed lax regulation for the housing bubble.
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He said laid back laws enabled banks to issue a slew of exotic mortgages that households later had trouble paying.
According to Mr Bernanke, the Federal Reserve needs to remain open to using the blunt tool of higher interest rates if a new financial bubble emerges.
“We still have much to learn about how best to make monetary policy and to meet threats to financial stability in this new era,” he said.
