Charles Plosser, the Philadelphia Fed President, has said that the Federal Reserve is aware of the risks of asset bubble due to its bond buying and low interest rate policies and is monitoring the developments in the market.

Plosser was responding to whether high stock prices are due to the fiscal stimulus package. Some expressed concerns that the U.S. stock market recorded its strongest year since 1997 only because the liquidity conditions are

artificially inflating prices. The Federal Reserve has already said that it will start rolling back its $10 billion bonds buying programme.

Mr.Plosser said at the American Economic Association's annual conference that, “I think we need to be concerned about that possibility. The Fed is aggressively trying to study asset classes, leverage.”

Mr.Plosser admitted that the policy makers had weak forecasting record and said that the bubble situations might affect growth in the future.Plosser has been opposing Fed bond buying is will be part of the Federal Open Market

Committee this year that will vote for policy settings. He said that he wants the Federal Reserve to conclude its programme soon.