Fed Dissenter Eric Rosengren Saw No ‘Compelling Case’ for Rate Cut

(Bloomberg) -- Federal Reserve Bank of Boston President Eric Rosengren said the case for cutting interest rates had not been “compelling,” as he spelled out his reasons for dissenting against his colleagues at the July 30-31 meeting.

“I do not see a clear and compelling case for additional monetary accommodation at this time,” he said in a statement Friday that listed low unemployment, inflation likely to rise toward the Fed’s 2% target, and financial stability concerns “given near-record equity prices and corporate leverage.”

Rosengren and Kansas City Fed chief Esther George dissented against the quarter percentage-point cut in favor of keeping rates on hold, dealing Chairman Jerome Powell the first double dissent since he took the Fed’s helm in February 2018.

Rosengren’s statement included charts showing stock prices and corporate leverage near all-time highs, returning to a theme he has highlighted in the past to express concerns at the risks of keeping rates too low for too long.

Powell played down financial stability concerns during a press conference Wednesday to explain the decision to cut rates, saying that while he took them seriously, “as I look at today’s situation, I don’t see them as a reason not to take this action today.”

To contact the reporter on this story: Alister Bull in Washington at abull7@bloomberg.net

To contact the editors responsible for this story: Margaret Collins at mcollins45@bloomberg.net, Jeff Kearns, Ben Holland

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