Fed may want to raise rates more slowly, Rosengren says

Recent low readings on inflation and concerns over slower international and domestic growth could force the Federal Reserve to slow the pace of interest rate rises, Boston Federal Reserve President Eric Rosengren said.

“While monetary policy should not overreact to short-term temporary fluctuations in financial markets, policy makers should take seriously the potential downside risk to their economic forecasts and manage those risks as we think about the appropriate path," Rosengren told the Boston Chamber of Commerce.

"These downside risks reflect continued headwinds from weakness within countries that represent many of our major trading partners, and only limited data to support the projected path of inflation to target.”

A second rate hike will face a strict test, on the basis of the incoming data Fed policymakers will have to be confident that consumer price inflation will hit their 2% target, he added.

Rosengren will be a voting member on the Federal Open Market Committee this year.

On Monday evening, his opposite number at the Atlanta Fed, Dennis Lockhart, indicated the central bank might not have enough data available to raise rates again when it met in April.