Housing, inflation pose dangers: GE exec

NEW YORK (Reuters) - A potential housing bubble and rising inflation are the two biggest threats to the U.S. economy, the head of General Electric Co.'s (GE.N: Quote, Profile, Research, Stock Buzz) vast real estate operations said on Tuesday.

Excessive interest rate hikes by the Federal Reserve also pose a danger to an economy that's currently growing well, Michael Pralle, chief executive of GE Real Estate, said at the Reuters Real Estate Summit in New York.

"If you have a significant value decline in major markets like New York, Boston and San Francisco, that could significantly impair confidence in the economy," Pralle said, adding that he did not think there was a national housing bubble.

Pralle said recent price figures suggested inflation is fairly benign, but said the Fed is limited to controlling short-term interest rates and the expectation for higher inflation could send long-term rates soaring.

"If the people that make the market in Treasuries decide that inflation is going up, those Treasuries could trade down significantly and the yields could go way up," he said.

The central bank, which has raised rates by a quarter of a percentage point each at 16 consecutive meetings, could raise them too far, considering the long lag before Fed policy makes its impact.

"As a businessman it makes me nervous how much they're tightening," he said.

The Fed's policy-making committee begins a two-day meeting on Wednesday.