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The Fed: Recession risk has grown because Fed didn’t hike, Rosengren says

Federal Reserve Bank of Boston

Boston Fed President Eric Rosengren is also concerned about potential financial excesses from the low level of interest rates

Boston Fed President Eric Rosengren on Friday said he wanted to raise interest rates this week to help prolong the economic expansion.

In a statement released on the Boston Fed’s website, Rosengren explained why he was one of three dissenters from the Fed policy committee decision this week to hold interest rates steady.

Rosengren said he had argued for “a modest, gradual tightening: out of a concern that not doing so would put the recovery’s duration and sustainability at greater risk, by generating the sorts of significant imbalances that historically have led to a recession.”

Rosengren argument in essentially what he had said in a speech calling for a rate hike just prior to the Fed meeting.

Read: Fed’s Rosengren backs interest rate hike

He said that leaving rates low might lead to a significant overshoot of the full employment level that could shorten, rather than lengthen, the duration of this recovery.

Fed Chairwoman Janet Yellen told reporters that the majority of the Fed policy committee thought the labor market “had room to run” and that more workers would join the labor market if rates stayed steady.

Rosengren said this effect might “unfortunately” be only temporary and might end in recession.

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The Fed: Recession risk has grown because Fed didn’t hike, Rosengren says Reviewed by on . Federal Reserve Bank of Boston Boston Fed President Eric Rosengren is also concerned about potential financial excesses from the low level of interest rates Bos Federal Reserve Bank of Boston Boston Fed President Eric Rosengren is also concerned about potential financial excesses from the low level of interest rates Bos Rating:
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