Fed’s Rosengren: U.S. Economy is in Good Condition
Federal Reserve Bank: On Monday, Federal Reserve Bank President – Eric Rosengren said that the U.S economy is in good condition. He said he had seen nothing in recent data that would change his view that the bank’s latest interest rate cut was not necessary.
“I view the U.S. economy as in pretty good shape right now.” Moreover, gross domestic product “looks like it is going to be growing around potential,” Rosengren told Reuters.
“The U.S. economy is in good enough shape that I dissented at the last meeting,” he said. “I did not think the last cut was necessary. I certainly think that there is nothing that has come in since that meeting that would change my view.”
Persistent soft domestic inflation, weak U.S business investment, and widespread economic growth slowdown, the Federal Reserve Bank cut interest rates three times since July. Policymakers have described this as a mid-cycle adjustment.
Rosengren voted against each rate cut. He said inflation “is a little bit below our 2% target but not dramatically below.”
Now the Federal Reserve’s benchmark overnight lending rate is in the range of 1.50-1.75%, down from 2.25-2.50% at mid-year.
Its chairman Jerome Powell and others indicated that their most recent cut in October is likely to be the last for now.
Rosengren declined to comment on whether he would support a decision expected at the Fed’s next meeting in December to leave rates as they are. He is in Oslo, where Norges Bank- Norway’s Central bank is hosting a financial regulation conference.
“I don’t make decisions until the meeting,” Rosengren said.
Rosengren sees a low likelihood of negative rates in the U.S
Earlier Rosengren, said the Fed was unlikely to cut rates below zero to fight an economic downturn. He commented while responding to questions from the audience after his speech on banking regulation.
However, Rosengren said the persistence of negative rates in Europe leaves the Fed less room to maneuver.
His speech focused on banking regulation, not the economic outlook or the U.S monetary policy.
Responding to the audience, Rosengren also said he would advocate forcing banks to stop share repurchases and dividend payments. However, this is if another downturn threatened the health of the banking system.
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