MNI POLICY: Fed's Rosengren: No Case for Cuts At This Time

By Jean Yung

     WASHINGTON (MNI) - Federal Reserve Bank of Boston President Eric Rosengren

on Friday said he voted against the rate cut this week due to "somewhat

elevated" concerns over financial stability and economic indicators showing the

Fed is close to achieving its dual mandate.  

     "With the unemployment rate near 50-year lows and inflation likely to rise

toward the 2% target, and with financial stability concerns being somewhat

elevated given near-record equity prices and corporate leverage, I do not see a

clear and compelling case for additional monetary accommodation at this time,"

Rosengren said in a statement posted on the Boston Fed website. 

     The Boston Fed chief laid out eight charts that illustrate his point. The

charts showed the U.S. economy growing somewhat faster than potential and the

trimmed mean PCE inflation rate at 2%. The latter is an alternative measure of

underlying inflation pressures calculated by Dallas Fed economists. The official

headline and core PCE inflation rates are at 1.4% and 1.6%, respectively. 

     The cost of credit, market volatility and credit spreads are not elevated,

he said, but stock prices and corporate leverage are near all-time highs. 

     The FOMC lowered rates by a quarter point to a target range of 2.00% to

2.25% this week and signaled further adjustments may be needed in light of trade

uncertainty, global headwinds and below-target inflation. 

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

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