Fed's Rosengren: It's Not Clear Whether Conditions For September Hike Have Been Met

Confidence inflation will move up towards a 2% annual rate, one of two conditions set out by the Federal Reserve that would justify a rate hike, remains in doubt, said Eric Rosengren, the president of the Boston Fed, on Tuesday. In a speech in New York, Rosengren didn't explicitly say whether he would back or oppose a rate hike in September. He said that the market turmoil and new signs of weakness overseas "might suggest a downward revision to the forecast that is large enough to raise concerns about whether further tightening of labor markets is likely." Less labor market slack is important to any forecast of higher inflation, the Boston Fed chief said. "Without an expectation of growth above potential and further tightening of labor markets, I would lose my primary rationale for a forecast of rising inflation, diminishing my confidence that inflation will reach the 2% target within a reasonable time frame," he said. Rosengren, who is not a voting member of the Fed policy committee this year, is seen as one of the more dovish regional Fed presidents.