** Asset Prices ‘More Important’ to Fed **

The rise and fall of asset prices such as stocks, bonds and homes will probably
play a larger role in setting U.S. interest-rate policy in the future, Federal
Reserve Bank of New York President Timothy Geithner said. ``Policy, in some
circumstances, will need to respond to asset price movements when those
movements alter the central bank’s assessment of the risks to its outlook,’’

Answering questions after the speech, Geithner said he was worried about the
rising current-account deficit, the broadest measure of U.S. trade.
``Anybody looking at the size of the U.S. current-account imbalance has to be
troubled by what it means for the future,’’ Geithner said. ``It is very hard to
have confidence that it is sustainable over a longer period of time,’’ and its
possible effect on asset prices ``is the core reason why it matters.’’
Source: Bloomberg