- Eric Rosengren, President of Boston Fed
The Federal Reserve has to stick to its current policy stimulus especially in light of the recent volatility in financial markets, said Boston Fed President Eric Rosengren, stressing that a scenario in which the central bank holds rates at record low until 2016 is viable. Meanwhile, Dallas Fed President Richard Fischer believed that the Fed should end its bond-buying programme as planned at the end of the current month despite the recent market volatility. The Fed is set to wind down its bond-buying stimulus at its meeting next week, but also said it will keep interest rates near zero for a "considerable time" after the end of bond-buying. The Fed is still likely to start raising interest rates in mid-2015, although it now seems a little less likely that the central bank would act sooner, and there are more chances it would wait longer amid concerns about persistently low inflation. Fed officials meet on 28-29 October to decide whether to withdraw its bond-buying programme as planned, and what language to use to communicate when they will raise borrowing costs. Some Fed officials are concerned that the Fed risks waiting for too long before beginning to hike interest rates. Recently Loretta J. Mester, President of the Federal Reserve Bank of Cleveland, pointed to research that revealed jobless rate had "almost" returned to a normal level, based on an analysis of five measures of labour market slack.
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