Eric Rosengren - Federal Reserve Bank of Boston

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Last quote by Eric Rosengren

I do not regard the weakness in first quarter data as a harbinger of softness in the underlying economy, and the strength of the labor market report on Friday provides some strong confirmation of that view.feedback
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May 10 2017
We can learn a lot about a person if we know what types of things he or she talks about or comments on the most frequently. There are numerous topics with which Eric Rosengren is associated, including U.S., June, and policy. Most recently, Eric Rosengren has been quoted saying: “I do not regard the weakness in first quarter data as a harbinger of softness in the underlying economy, and the strength of the labor market report on Friday provides some strong confirmation of that view.” in the article Rosengren maps out hawkish Fed plan for U.S. rates, portfolio.
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Eric Rosengren quotes

Without further gradual increases in interest rates, one might be concerned that the unemployment rate could drift below its long-run sustainable level – and as a result, inflation could eventually exceed the Fed's 2 percent target. The stance of monetary policy will need to adjust – to prevent the economy from dramatically overshooting on both elements of the dual mandate, which would place the economic recovery at risk.feedback

My own forecast is that we will achieve both elements of the dual mandate by the end of 2017 – and as a result, I believe that a still gradual but somewhat more regular increase in the federal funds rate will be warranted.feedback

Absent significant negative economic news over the next month, the market's assessment of the likelihood of tightening in December seems plausible.feedback

I would much prefer that tightening be gradual, and that policymakers try to avoid circumstances in which we need to tighten more quickly.feedback

We have the luxury right now to make a change, wait a little while, see what the impact is. If you wait too long ... the more likely you are going to have to do it more quickly ... The less likely you are to calibrate it just right.feedback

I want to probe, I don't want to plunge. I am getting more concerned about the optionality we are losing if we wait too long.feedback

When we have an unemployment rate that's around 10 percent, we should be very aggressive in our monetary stimulus. When we have conditions like we have right now, which is we are very close to full employment … and core inflation is around 1.7 percent, those conditions are very different.feedback

To me, that seems quite appropriate.feedback

By 2019, I expect the unemployment rate to have declined below 4.5 percent. While I have a long track record of advocating for policy that supports robust labor market conditions, that is below the rate that I believe is sustainable in the long run.feedback

Unemployment this low may well have the desirable effect of bringing more workers into the labor force – but, unfortunately, only temporarily.feedback

I don't think recessions happen because it's been a long time ... but because of policy mistakes. Right now it is hard to see us raising rates too rapidly.feedback

There are also longer-term risks from significantly overshooting the U.S. economy's growth. If we want to ensure that we remain at full employment, gradual tightening is likely to be appropriate.feedback

A reasonable case can be made for continuing to pursue a gradual normalization of monetary policy.feedback

Risks to the forecast are becoming increasingly two-sided.feedback

One of the key goals should be that we don't have another recession.feedback

Votes by themselves shouldn't be a reason for altering monetary policy. If we were experiencing significant changes in financial conditions that made us significantly alter the outlook going forward, that would be something that we should take into account.feedback

The reason they should believe this time is different is that the economic conditions are changing over this period.feedback

The reason I am more confident is we are getting better data.feedback

Stock markets globally have improved quite significantly. The data has been coming in better and not only in the United States but in many other parts of the world. Some of the headwinds we thought might be a significant problem as recently as March seem to be a little bit less of a significant problem as we go into June.feedback

If we see no progress on inflation at all, there would be no rush to be raising rates. In order to ease further we'd have to see that we're not getting the forecasts of 2 percent growth at all. We'd probably have to see a situation where we'd be concerned that the unemployment rate would be rising rather than falling ... and a significant weakening in labor markets.feedback

While monetary policy should not overreact to short-term temporary fluctuations in financial markets, policy makers should take seriously the potential downside risk to their economic forecasts and manage those risks as we think about the appropriate path.feedback

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