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Risks to U.S. economy increasingly two-sided, says Fed's Rosengren

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Staff Writer | September 9, 2016
Fed should continue on its path of gradual interest rate increases, with nothing to be gained from waiting too long, quite the opposite, a top Federal Reserve official said.
Eric Rosengren
U.S. economy   Pursuing a gradual normalization of monetary policy
"My personal view, based on economic data that we have received to date, is that a reasonable case can be made for continuing to pursue a gradual normalization of monetary policy," the president of the Federal Reserve bank of Boston, Eric Rosengren, said in prepared remarks for a speech.

In his opinion, not continuing on the path of gradually removing policy accommodation might shorten, and not prolong, the duration of the recovery, as the monetary authority might be forced to tighten policy more sharply at a later stage.

"The risks to the forecast are becoming increasingly two-sided, in my view," Rosengren explained.

"Weakness emanating from abroad poses short-term downside risks to the domestic US economy," yet there are also "longer-term risks from significantly overshooting the U.S. economy's growth," he said.

Rosengren warned that some asset markets might "become too ebullient" - reiterating previous concerns over commercial real estate prices - but reportedly refused to be drawn as to the possible exact timing of a hike.


 

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