The average 30-year fixed rate mortgage was at a record low 3.91 percent last week in a Freddie Mac index. Those low mortgage rates have failed to revive home construction and purchasing which remain depressed. Builders broke ground on 685,000 homes at an annual pace in November, still 70 percent below the peak pace of 2.3 million homes recorded in January 2006.
"I view monetary policy as attempting to walk a fine line," George said. "On the one hand, today's policy settings are designed to encourage risk-taking and to stimulate much- needed growth across our economy. But on the other hand, experience has shown that pushing risk-taking too far can cause the mispricing of risk, the misallocation of capital and the ultimate weakening of financial firms' balance sheets."