Rosengren:  'Low For Long' Rates Carries Consequences Too

Boston Fed Pres Rosengren (usually considered a hawk; has been very much on the downbeat side of the FOMC in terms of the economic outlook of late though) interviewed on Yahoo Finance.

• Asked about QE expansion/Yield Curve Control as options for the Fed at this point, he says: Further QE would be supportive of the economy; but 10-Yr Tsy yields already low. While it would help, not sure QE would be nearly as supportive as, for example, fiscal policy. We also have 13-3 facilities in case of a second wave downturn.
• Re seeming recent divergence among FOMC members over forward guidance parameters: We're a long way from being able to meet our 2% inflation goal, so the details are more likely an issue 2-3 years down the road. Market understands Fed funds rate not rising for several years. How we measure it when we're so far away from our target is of secondary concern.
• Re 'financial stability' concerns: If there's significant imbalances that would hinder us from achieving dual mandate then we could raise interest rates; depends on circumstances at that time. Hopefully financial stability concerns are not that serious. That caveat is important because keeping rates that low for long has consequences; seeing some of that now in commercial real estate, and leveraged firms going into bankruptcy - these are now some of the headwinds for the economy over the next 6-9 months.