Federal Reserve Bank of New York President John Williams played down the linkage between monetary policy and financial stability in comments made public Monday, while also warning that using rate policy to tame bubbles can bring unwanted economic pain.

The world's central bank umbrella body, the Bank for International Settlements (BIS), called on Sunday for more interest rate hikes, warning the world economy was now at a crucial point as countries struggle to rein in inflation.

Asian stocks wobbled on Tuesday as investors held tight ranges awaiting clues on the interest rate outlook and wary of risks about China's shaky economic recovery and developments in Russia after an aborted mutiny.

Oil prices edged higher on Tuesday, spurred by worries about political instability in Russia and possible supply disruptions, as well as U.S. demand hopes ahead of the summer driving season.

The U.S. dollar held its ground against major currencies on Tuesday as tension in Russia simmered and traders looked ahead to U.S. data that may determine the timing of interest rate hikes.

Britain's economy showed signs of a slowdown this month but inflation pressures stayed high, according to a survey published a day after the Bank of England raised interest rates sharply and said it was ready to do more to tame price growth.