News Summary: IMF says Fed should monitor stimulus

News Summary: IMF says low interest rate policies helping economy, should be closely monitored

Associated Press

CAUTION URGED: The International Monetary Fund is warning the Federal Reserve and other central banks that their extraordinary efforts to jump-start economic growth could inflate asset bubbles and destabilize financial markets.

BUBBLE POTENTIAL: The global lending organization said low interest rate policies intended to spur borrowing, spending and investing are providing "essential support" for economic growth and should continue. But it noted that the policies could have "adverse side effects," including excessive corporate debt, a stock market bubble and risky investments by pension funds.

LONG-TERM GOALS: The Fed plans to keep short-term interest rates at record lows at least until unemployment falls to 6.5 percent. And it is purchasing $85 billion a month in Treasury and mortgage bonds to lower long-term rates and encourage borrowing.

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