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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.
He said laid back laws enabled banks to issue a slew of exotic mortgages that households later had trouble paying.
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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.
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