The International Monetary Fund has urged the US Federal Reserve, the ECB and other central banks to closely monitor their extraordinary efforts to jump-start economic growth.
The Fund warned that such policies could inflate asset bubbles and destabilise financial markets.
The global lending organisation said in a global stability report today that the low interest rate policies, which are intended to spur borrowing, spending and investing, are providing "essential support" for economic growth and should continue.
But it noted that the policies could have "adverse side effects," including excessive corporate debt, a stock market bubble and risky investments by pension funds.
The Fund said there are few signs of asset price bubbles yet.
The global stability report was released in advance of spring meetings of the IMF and World Bank in Washington this week.
The IMF's warning echoes recent debates among Federal Reserve policymakers, who have pursued aggressive measures intended to help lower still-high unemployment.
The Fed has said it plans to keep short-term interest rates at record lows at least until US unemployment falls to 6.5%. And it is purchasing $85 billion a month in Treasury and mortgage bonds to lower long-term rates and encouraging more borrowing.
The effect on interest rates has also encouraged investors to shift money into stocks and other riskier holdings, and away from bonds. By driving up stock prices, the Fed hopes the lower rates will create a "wealth effect" and encourage more consumer spending and economic growth.
