Investing.com – Boston Fed President Eric Rosengren warned on Tuesday that faster interest rate hikes would be needed should unemployment continue to drop below the level of “natural employment” and cause the economy to overheat.
Rosengren, said the current unemployment rate of 4.4%, a 10-year low, has fallen below his 4.7% estimate of “natural employment”, which would spur inflationary pressure as wage growth steepens.
Citing a survey from economists, who predict a 10% probability of unemployment dropping below 4%, Rosengren, said "Such an overheated economy would likely be accompanied by higher inflation, which in turn would likely elicit higher interest rates".
The dollar had a fairly muted reaction to Rosengren's comments, while gold slipped to the downside.
The U.S. dollar index traded 99.43, up 0.4%.
Gold futures sagged $10.34, or 0.84% to $1216.83, while the U.S. 10-Year traded at around 2.403, up 1.14%.