While "excessive risk-taking" in a low interest rate environment must be monitored, "prematurely" raising rates to counter financial market risks could be "quite costly" and "counterproductive, Federal Reserve Chairman Ben Bernanke said Friday night.

There are, however, other ways that the Fed can use its monetary tools to promote financial stability in conjunction with its supervisory efforts, Bernanke said.

Subscribe Now

Independent and authoritative analysis and perspective for the bond buying industry.

14-Day Free Trial

No credit card required. Complete access to articles, breaking news and industry data.