Fed Rosengren Says Rate Hike Delay Risks are Two Sided

The Federal Reserve, long hesitant to raise U.S. interest rates, increasingly faces risks if it waits too much longer so a gradual policy tightening is likely appropriate, a top Fed official said on Friday.

In another sign that a U.S. rate hike is approaching, Boston Fed President Eric Rosengren said “risks to the forecast are becoming increasingly two-sided.” That means that while a slowdown overseas remains a concern, the U.S. economy has proven resilient and could even overheat if Fed policy remains unchanged for too much longer, he said.

Rosengren, an historically dovish Fed policymaker who has become more confident about hiking rates this year, cited Britain’s vote to leave the European Union as an example of U.S. resistance to shocks from abroad. “There are also longer-term risks from significantly overshooting the U.S. economy’s growth,” he said.

“If we want to ensure that we remain at full employment, gradual tightening is likely to be appropriate,” said Rosengren, a voter on the Fed’s policy committee this year.

via CNBC

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Alfonso Esparza

Alfonso Esparza

Senior Currency Analyst at Market Pulse
Alfonso Esparza specializes in macro forex strategies for North American and major currency pairs. Upon joining OANDA in 2007, Alfonso Esparza established the MarketPulseFX blog and he has since written extensively about central banks and global economic and political trends. Alfonso has also worked as a professional currency trader focused on North America and emerging markets. He holds a finance degree from the Monterrey Institute of Technology and Higher Education (ITESM) and an MBA with a specialization on financial engineering and marketing from the University of Toronto.
Alfonso Esparza