MNI 5 Things: Fed's Rosengren Calls for Faster Pace of Hikes

--Boston Fed President Eric Rosengren Delivers Remarks Friday

By Jean Yung

     WASHINGTON (MNI) - The following are the key points from Federal Reserve

Bank of Boston President Eric Rosengren's remarks prepared for the Springfield

Regional Chamber Outlook in Springfield, Mass. on Friday: 

     - Rosengren maintains his call that the economy may need more than three

quarter-point hikes this year, an opinion he held already as of the December

FOMC and one in line with recent hints from Chair Jay Powell and other Fed Board

governors. In addition, he makes a subtle shift in language in characterizing

the pace of appropriate hikes as "regular but gradual." "To keep the economy on

a sustainable path, I expect that it will be appropriate to remove monetary

policy accommodation at a regular but gradual pace -- and perhaps a bit faster

than the three, one-quarter point increases envisioned for this year in the

assessment of appropriate policy from the December 2017 FOMC meeting." 

     - He is unruffled by recent market volatility, saying it's a "healthy

realization" by market participants of two-sided risks, including that "wages

and prices could grow too quickly, if there were too much fiscal and monetary

stimulus." 

     - Rosengren continues to be confident that the economy is on a trajectory

to hit the Fed's inflation target, saying three-month changes and six-month data

how an above-target inflation rate and recent core inflation readings suggest

"we have been right at our 2 percent target for the past three and six months." 

     - He cites weaker consumption data since December as likely reflecting a

"temporary pause" this quarter following an unexpectedly strong fourth quarter,

but that consumption growth over the remainder of the year should be solid,

supported by strong fundamentals. 

     - A trade war or a substantial change in the geopolitical situation are

possible downside risks to his outlook. 

--MNI Washington Bureau; +1 202-371-2121; email: jean.yung@marketnews.com

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