Boston Fed President Eric Rosengren said in a speech that “today, the two elements of the Fed’s mandate are sending opposing signals for monetary policy”. That is, low unemployment suggests “a bit tighter policy” while low inflation “the opposite”. But there is “no clarion call” to alter current policy in near term. He viewed current policy as “slightly accommodative” consistent with lifting inflation back to target over time. He added “the Fed can afford to wait to see if that forecast does indeed materialize.”
On the economy, Rosengren is relatively optimistic and he expects unemployment rate to fall further. He noted that the significant decline in equity markets in Q4 has largely recovered. Worries over Brexit and China slowdown “appear to have subsided since the beginning of the year”. Also, Q1 growth in US was “stronger than many forecasters expected”.
On trade, he said “I am optimistically assuming that both sides in the trade negotiations will work to reach an agreement”. And, “I am also assuming that while the uncertainty is not helpful, it will be transitory, and thus have only a modest effect on the forecast for the U.S. economy overall.”