Boston Fed’s Rosengren Makes Case for Reverse Operation Twist

Fed shouldn’t wait to hike interest rates

by Greg Robb
Market Watch

Boston Fed President Eric Rosengren wants the market to be aware that the central bank could act to mitigate a potential bubble brewing in the bond market.

The extraordinary powers the Fed used to help the economy get out of the financial crisis can now do the reverse and raise long-term Treasury yields. Rosengren sat down with MarketWatch to discuss his support for a quarter-point rate hike at the September Fed policy committee meeting.

He elaborated on a speech he gave on Friday at the start of a conference on the economy at his regional bank when he said “if one were concerned about the historically low 10-year Treasury…rates, perhaps because of potential financial stability concerns, the balance sheet composition could be adjusted to steepen the yield curve.”

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