The Federal Reserve should use regulatory powers aggressively and pro-actively to limit the threat from future asset price bubbles, Frederic Mishkin, one of the Fed’s governors, said on Thursday.

Mr Mishkin, a top academic economist who is intellectually close to Fed chairman Ben Bernanke, said “it falls to regulatory policies and supervisory policies to help strengthen the financial system and reduce its vulnerability to both booms and busts in asset prices”.