Federal Reserve Bank of Boston President Eric Rosengren (pictured) urged his policy-making 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 “over-hot economy.”
Rosengren said he -- along with most economists in the Blue Chip Economic Indicators survey -- expects above-potential growth over the next year, pushing unemployment even farther below its lowest sustainable level. Unemployment fell to 4.4 percent in April, already under his 4.7 percent 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 that is currently underway,” Rosengren said.
