Donald Kohn

The Federal Reserve's low interest rate policy is meant to encourage investors to move into riskier assets in order to promote economic recovery, and there are no signs currently the policy is resulting in the build-up of a U.S. asset bubble, the central bank's number-two official said on Monday.

As the Fed chairman, Donald Kohn, reported Tuesday, he has a firm belief the economic recovery will not reflect V-shaped growth. He considers the revival to be moderate.

 In his speech at the National Association of Business Economics meeting in St. Louis he amplified that he expects the recovery in US economic activity will proceed at a moderate pace in the second half of this year before strengthening some in 2010.