It is always a challenge for regulators to identify bubbles, said Esther George, the president of the Kansas City Fed, on Wednesday. "Whether or not certain risks have reached the point that they represent excess, they represent bubbles, that is always murky territory," George said at a conference sponsored by The Institute for New Economic Thinking. By the time everyone agrees there is a bubble, "you have generally waited too long," George said. This puts pressure on monetary policy makers to smoothly unwind the bubble, she said. George is not a voting member of the Fed policy committee this year. She has been warning that zero interest rates could spark financial instability since 2013.
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