Former Boston Fed President Eric Rosengren: Don't think we're down to just one rate cut yet

Despite the holiday short week, been a big few days for Fed speakers. One of the main takeaways, officials seem to be in no rush to cut rates right now. Joining us, former Boston Fed president Eric Rosengren. He is now a visiting scholar with MI TS Golub Center. Is that, is that the take away for you too, Eric? We've kind of been there. We're we're down to like one, maybe one rate cut this year is sort of the consensus. Yeah, the median from the summary of economic projections was one, but I would say eight of the participants at the last FOMC meeting penciled in too. I think we're at a stage where if we continue, we had earlier in the spring a series of reports that look like inflation was flattening out and that's using both the CPI and the PCE. Right around the meeting. We got ACPI that was more favorable. I am expecting we'll probably get some more favorable inflation numbers over the next couple of months. If that does happen, that would set up a potential for an easing in September and possibly one in December. So I don't think we're down to just one yet. I think it does depend on how the data comes in. If the data doesn't continue to come in similar to what we saw with the CPI in a favorable sense, then it might be difficult to get the two in. But I think we'll have to see how over the course of the summer the inflation data comes in. So Eric, is, is the, the waning inflation that we're seeing, do you attribute that to what the Fed did in terms of the 500 whatever, how many basis points that that the Fed hike, do you think that's a result of that? And, and what I'm getting at is looks like there's a bit, a bit of a lag. Do we need, do we need to worry about unemployment going well above 4%? Is there going to be a lag there as well in, in, in is the economy slowing more than we know? Well, that's one of the challenges with monetary policy is there can be pretty long lags between when the Fed takes action and when the effects are fully felt through the economy. So more recently, we have gotten some weaker data. The retail sales was a little bit weaker. Initial claims has cropped up. There are a bunch of Labor market indicators that are indicating that the economy is a little bit slower than it was before. As you say, the unemployment rates at 4%, it was around 3 1/2 percent earlier. So we're probably at a stage where if the labor market were to weaken significantly from here, it would start showing through to the unemployment rate in probably an undesirable way. But my baseline forecast would be kind of 2% growth and that wouldn't be a situation that I would expect the unemployment rate to go up considerably. And I would say in the absence of the tightening that was done, we probably would be seeing still very tight labor markets and we probably would be seeing stronger growth at this point. Well, that's amazing because if we get it, the scenario is just so, so, so Goldilocks there so that so we can get our two rate cuts. We can keep employment unemployment very low and keep inflation low. It's like too good to be true, but maybe it'll happen. We'll, we'll, we'll check back with you if we can in, in, in a couple of months. It's hard to, I mean, aren't you surprised? Is it really working? It's really working. I can't believe it. It's been more favorable than many economists expected, but that's good news for the economy. It's good news for the American, right? We, we're we're not going to. We're not complaining. All right. Thank you.