Eric Rosengren Upgrades His Economic Outlook, Shrugging Off Geopolitical Risks
Eric Rosengren (Boston Fed President) claimed Fed should execute at least 3 more rate hikes in 2018 due to economic improvement even considering all the geopolitical obstacles. Rosengren expects inflation and growth to pick up. Specifically, he noted: "I expect somewhat more tightening may end up being needed than the median of two more hikes in 2017 forecast by the central bank's policy-making committee last month, when it delivered the first rate rise of the year”.
He, however, added that the trade tension with China carries a risk in which "spillover effects are possible (and) difficult to measure, including a spike in prices”. He also said that if jobless rate drops under the level, that suggest neutral stance, the economy will blow up. As of the impact of tax reform, Boston Fed President said: "risks not having sufficient fiscal capacity in the future when it might be needed to head off an economic downturn.”
In conclusion, he reassured: "I am not forecasting significant trade disruptions or substantial boom-bust problems, but the risk that they could develop means we must be very carefully monitoring."