Federal Reserve Bank of New York President William Dudley said central bankers must “be willing to act” under certain conditions to combat asset bubbles, backing regulatory or supervisory actions over monetary policy. Dudley, in the text of a speech in New York today, said monetary policy isn’t likely to work as well because “it is too broad.” He also said that speaking out on the dangers of bubbles as they are forming “would allow the central bank to signal its concern.” “Let me underscore the challenge that central bankers face in combating asset-price bubbles,” Dudley said in remarks to the Economic Club of New York. “Asset bubbles are hard to recognize in real time and each asset bubble is different. However, these challenges cannot be an excuse for inaction.” Dudley’s comments go beyond remarks he made in December, when he said it is “still an open question” whether limiting leverage through regulatory and supervisory means or via monetary policy would be more effective. The Fed’s record in the years before the economic crisis has been criticized in Congress, which is considering the most sweeping changes to financial regulation in decades.