Low interest rates raise issues about financial stability and policymakers must take heed, Federal Reserve Bank of Boston President Eric Rosengren said Tuesday.
“I believe monetary policymakers must factor in financial stability concerns,” Rosengren said in a speech in Amsterdam, according to materials released by the Fed.
“Financial intermediaries will need to factor in the possibility of lower rates, particularly during economic downturns, and flatter yield curves,” he said.
Low rates “have implications for monetary policy responsiveness to negative shocks,” he said.
Eric Rosengren, president and chief executive officer of the Federal Reserve Bank of Boston, speaks during a meeting with a coalition of activists on the sidelines of the Jackson Hole economic symposium, sponsored by the Federal Reserve Bank of Kansas City, in Moran, Wyoming, U.S., on Thursday, Aug. 25, 2016. Federal Reserve Vice Chairman Stanley Fischer and 10 of his colleagues met Thursday with a coalition of activists to hear complaints about the U.S. central bank, in a first-of-its-kind event on the sidelines of an annual policy retreat in Jackson Hole, Wyoming. Photographer: David Paul Morris/Bloomberg
The muni market may see additional volatility due to "uncertainties related to the future of tariffs and stronger inflation prints," said Barclays strategists led by Mikhail Foux.
The industry for years has lobbied Congress and the Treasury Department to make the changes, but the issue has taken on more urgency amid a data center boom that promises to transform the U.S. energy landscape
Federal Reserve Vice Chair Philip Jefferson said that as interest rates have moved toward a more neutral level, "it makes sense" now to proceed with caution.
The California Debt and Investment Advisory Commission explored public finance solutions to child sexual abuse claims this week at an event in San Diego.
