Lockhart, Dennis

The Federal Reserve will likely have to continue with its bond buying efforts into the second half of this year but needs to watch out for the possible formation of asset price bubbles, a key central bank official said Tuesday.

"It's something we have to watch out for, particularly for reasons of financial stability," Federal Reserve Bank of Atlanta President Dennis Lockhart told journalists after giving a speech in the Spanish capital.

Mr. Lockhart, who isn't a member of Federal Open Market Committee this year, said there are currently no signs that asset price bubbles are forming. He said that some have pointed to the recent rise of the value of farm land and stock markets as evidence that these assets are no longer rationally valued. "I don't think you can make that claim," he said. "But I think the recent history of our housing bubble suggests we have to be vigilant about that."

As reported by Dow Jones News