Comments from Rosengren:
- Not sure that US-China trade news alters Fed view of being patient
- Also notes potential for market reaction to tariffs
- It is hard to react to trade situation until we have better information
- Challenge for Fed is how much markets react to tariffs
- Asset prices are ‘a little frothy’
- Sept is when Fed is expecting balance sheet run-off to end but that could change based on new information
The Fed has argued that the balance sheet runoff is technical but this comment certainly argues that it’s more nuanced. The criticism about the Fed reacting to financial markets won’t exactly be dampened by these comments.