THE International Monetary Fund is urging the Federal Reserve and other central banks to closely monitor their extraordinary efforts to jump-start economic growth, warning that the policies could inflate asset bubbles and destabilize financial markets.

The global lending body said in a global stability report released yesterday 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 says 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 Fed 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 unemployment falls to 6.5 percent. And it is purchasing US$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.

In the months after the Fed launched the bond-buying program last fall, stocks have surged. The Dow Jones industrial average and Standard & Poor's 500 index both hit record highs this month.

At a meeting of the Fed's policymaking committee last month, some officials argued the Fed's programs could lead to another stock market bubble or lure investors to take on too much debt.

Janet Yellen, the Fed's vice chair, downplayed those risks in remarks on Tuesday at a conference sponsored by the IMF.

"I don't see pervasive evidence of rapid credit growth, a marked buildup in leverage, or significant asset bubbles that would threaten financial stability," she said. "But there are signs that some parties are reaching for yield, and the Federal Reserve continues to carefully monitor this situation."

The Fed is working with other regulators to enhance its oversight of financial markets, she said.