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Fed's Rosengren sees three to four rate hikes next year

Staff Writer |
The Federal Reserve (Fed) will probably need to raise interest rates in December and then three of four times "over the course of next year," assuming the U.S. unemployment rate continues to fall and inflation rises, Boston Fed President Eric Rosengren said.

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If inflation reaches the Fed's goal while the unemployment rate, now at a 16-year low of 4.2 percent, is below 4 percent that may be a signal that the economy could be overheating, Rosengren suggested in an interview.

To stabilize inflation at 2 percent, Rosengren said, "you might have to overshoot" by pushing rates higher than the level expected in a healthy economy. In September, Fed officials estimated that so-called neutral rate to be 2.8 percent.

The Fed left rates unchanged last month, but signaled it would likely raise them again in December, and three more times next year.


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