|
Boston Fed President Eric Rosengren, a historically dovish
policymaker who surprised some in September when he joined the
minority in advocating a rate rise, said the U.S. economy should
hit its inflation goal next year and could well go too far in
driving unemployment lower.
In arguing that a modest tightening was needed to avoid a sharp
policy change in the near future, Rosengren's speech, among the
first by Fed officials since the U.S. election, appeared to
reinforce market expectations - now above 75 percent - for a
mid-December hike.
"Absent significant negative economic news over the next month,
the market's assessment of the likelihood of tightening in
December seems plausible," Rosengren, a voting member of the
Fed's policy committee this year under a rotation, said in
prepared remarks.
The Fed, having raised rates last December, has since stood pat
and did so again at a policy meeting just before this month's
presidential election.
Rosengren decided not to dissent again in November because, he
said, changes in the Fed statement "were well aligned with the
notion (and the market perception) of a high likelihood of
tightening in December."
Investors reacted to the shock election of Republican Donald
Trump by selling Treasuries and buying U.S. stocks, an effective
bet that fiscal stimulus will boost U.S. inflation, which has
remained below the Fed's 2-percent target for years.
Rosengren said he expects the central bank's preferred price
measure, now 1.7 percent, to reach target next year.
"I would much prefer that tightening be gradual, and that
policymakers try to avoid circumstances in which we need to
tighten more quickly," he said, so to avoid disrupting an
economy that is "now attaining" the Fed's inflation and
employment goals.
(Reporting by Jonathan Spicer; Editing by Chizu Nomiyama)
[© 2016 Thomson Reuters. All rights
reserved.] Copyright 2016 Reuters. All rights reserved. This material may not be published,
broadcast, rewritten or redistributed.
 |
|
