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4/19/2017, 6:49 PM (Source: TeleTrader)
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Rosengren: Fed can turn to balance sheet earlier

A reduction in the United States Federal Reserve's balance sheet can "begin relatively soon" regardless of the ongoing normalization of the benchmark rate of interest, Eric Rosengren told participants at a conference in New York. Speaking on Wednesday, the president of the central bank's subsidiary in Boston stressed pushing the move forward wouldn't significantly hamper the stimulus provided by policymakers.

In turn, it would allow them to focus on "gradual increases in the federal funds rate target as the primary mechanism for normalizing monetary policy and calibrating the economy," he underscored. The non-voting member of the Federal Open Market Committee stated zero interest will be more common in recessions as well as "large-scale asset purchases," due to weak growth in prices and slow advance in productivity, alongside demographic factors.

In his words, equilibrium short-term interest rates are set to remain low by historical standards. Rosengren clarified he sees the trend expanding throughout the world in central banking.

Breaking the News / IT