Bloomberg News/Landov
Boston Fed President Eric Rosengren on Friday said he doesn’t think an interest-rate cut is needed at the moment.
“Most of the news that we’ve been getting has been pretty good,” Rosengren said, in an interview on CNBC.
Rosengren said if he were on the Bank of Japan or the European Central Bank, he would seriously be thinking about taking additional easing steps.
“The U.S. economy is not at that point. The economy is actually quite reasonable at this stage,” he said.
“I don’t want to ease if the economy is doing perfectly well without that easing,” he added
Rosengren is the last Fed official to speak publicly before the central bank goes silent to prepare for its meeting.
Financial markets pricing a 100% chance of a quarter-point rate cut at the Fed’s meeting next July 30-31. Investors had priced in a half-point cut after a speech Thursday by New York Fed President John Williams but retreated when the New York Fed walked back his remarks.
Read: Trump piles on Fed after Williams slip-up
Some doubts might creep into the market next week as Rosengren is a voting member on the Fed’s interest-rate committee this year.
The Boston Fed president said the flatter yield curve was not an important signal of an economy poised for trouble.
He said the yield on the 10-year Treasury TMUBMUSD10Y, +1.66% had fallen primarily because of weakness in U.S. trading partners.
Rosengren said he won’t make up his mind interest rate policy until after the second quarter GDP data comes out next Friday. He said he expected growth in the neighborhood of 2% and a “pretty good” core inflation print that is close to 2%.
He said he wouldn’t support a rate cut unless the data is showing some slowdown.
Some Fed officials are talking about an insurance cut.
But Rosengren pointed out that insurance always comes with a price. In this case, it would financial stability risks.
Rosengren said he agreed with the general view that the Fed must act aggressively once it is clear the economy is going into a downturn.
But he said that is not “where we are now.” The stock market DJIA, -0.25% is at all-time highs, he noted.
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