After the Federal Reserve Bank raised short-term interest rates in December, future rate increases are likely to be gradual since inflation remains well below the Fed’s 2 percent target rate, Boston Federal Reserve Bank President told attendees at a Greater Boston Chamber of Commerce event Wednesday morning.
Economic data and its impact on the economic outlook of policymakers will influence the future path of rates, according to Rosengren.
Rosengren noted an average of 284,000 jobs added monthly to the U.S. economy over the past quarter but also mentioned a weak stock market so far in 2016, weak oil and commodity prices, and falling estimates of fourth quarter gross domestic product growth in the U.S.
“While monetary policy should not overreact to short-term, temporary fluctuations in financial markets, policy makers should take seriously the potential downside risks to their economic forecasts,” Rosengren said.
December’s interest rate increase was the Fed’s first since the Great Recession and Rosengren described the response to it as “quite uneventful.”
