To prevent asset bubbles from developing, the central bank should consider an increase in its key interest rate, said Thomas Hoenig, president of the Federal Reserve Bank of Kansas City. "I would view a move to 1% as simply a continuation of our strategy to remove measures that were originally implemented in response to the intensification of the financial crisis that erupted in the fall of 2008," he said. Mr. Hoenig voiced concern that the Fed's policy of keeping rates low for "an extended period" will cause trouble.

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