Below are some key quotes, via Reuters, from the speech delivered by Boston Fed President Eris Rosengren.
- The further U.S. gets below full employment the more risk there is of inflation increasing.
- Fed will learn a lot in coming year over appropriate size of balance sheet.
- Fed cannot determine appropriate size of balance sheet before it decides on framework of monetary policy.
- No alarm going off yet in financial markets, but are “A bunch of yellow lights” including commercial real estate.
- Continued growth, tighter labor markets will likely lead to “imbalances” including “but not limited to” faster inflation.
- Gradual rate increases should continue to “mildly restrictive” level to avoid need for faster rate increases later.
- Strong growth expected to continue for now, though trade and emerging markets problems pose risks.
- Positive real rate of interest one sign economy is “fully recovering” from great recession.
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