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Fed Officials Worry Overheating Apartment Markets Could Trigger Next Bubble

Former Federal Reserve Chair Janet Yellen

Federal Reserve officials are worried apartment towers in cities like New York, San Francisco and Boston could be pushing us into the next asset-price bubble.

Fed Chairwoman Janet Yellen commented on the inflated state of commercial real estate prices during a speech she made at Stanford University last month, and other officials, including Boston Fed President Eric Rosengren, are eyeing the growth of luxury housing with trepidation, Bloomberg reports. Most Fed officials have said they prefer to address any price bubbles through financial supervision rather than raising rates quickly.

Despite that preference and the Fed’s unanimous vote to leave interest rates unchanged yesterday, experts warn the Fed will resort to raising rates to combat overheating markets if left with no other choice. [Bloomberg]