Rosengren favours 3 more hikes to foil overheating

NEW YORK: Boston Fed President Eric Rosengren urged his policymaking colleagues to raise interest rates three more times this year and consider starting to shrink the central bank’s balance sheet after their next hike to avoid creating an “overhot economy.”

Rosengren said he expects above-potential growth over the next year, pushing unemployment even farther below its lowest sustainable level. Unemployment fell to 4.4 per cent in April, already under his 4.7 per cent estimate for full employment.

“This would represent an unsustainable, overshooting pace, and provides an important rationale for continuing the process of normalization of monetary policy,” Rosengren said on Wednesday in the text of his prepared remarks in South Burlington, Vermont.