Fed May Speed Things Up More Than Predicted

Boston Fed president Eric Rosengren. (Photo: Federal Reserve Bank of Boston)

NEW YORK CITY—After increasing the federal funds rate just twice in the past decade, the Federal Reserve may end up hiking short-term interest rates this year more frequently than the current forecast, the head of the Boston Federal Reserve said Wednesday. Boston Fed president Eric Rosengren made his comments in a speech to the New York Association for Business Economics here.

The economy has continued to improve,” Rosengren said Wednesday. “Most forecasters are predicting above-potential growth and a gradual tightening in labor markets. In my view, such a path would justify a continued, gradual removal of monetary policy accommodation at least as quickly” as suggested by the Fed’s current Summary of Economic Projections, “and possibly even a bit more rapidly than that forecast.” The SEP predicted three increases over each of the next three years as inflation edges up to a target and GDP growth remains in a range of 2%.