Bloomberg Talks: "Eric Rosengren Talks Fed"

Date: January 13, 2026
Host: Bloomberg
Guest: Eric Rosengren, Former President of the Federal Reserve Bank of Boston

Episode Overview

In this episode of Bloomberg Talks, Eric Rosengren, former President of the Boston Fed, joins the show to analyze the Federal Reserve’s immediate policy options amidst persistent inflation, modest labor market growth, and intensifying political pressures. The discussion covers the potential impact of leadership changes at the Fed, the risk to central bank independence, and the likely economic trajectory for the coming year.

Key Discussion Points & Insights

1. Current Economic Conditions and Inflation Outlook

• Moderation in Easing Expectations:
  • Rosengren notes that the case for the Fed to ease interest rates is presently weaker than it was a quarter ago, primarily due to persistent inflation and a labor market that, while slow-growing, remains stable.
• Inflation Data:
  • "The CPI at 2.7% is substantially above the 2% inflation target. ... If you look at the PC measure of inflation, it's been gradually rising." – Eric Rosengren [00:40]
  • Inflation has remained above the Fed’s 2% target for almost five years.
• Labor Market Overview:
  • Job growth has averaged 50,000 per month, which Rosengren views as reasonable, given stagnant labor force growth due to lower immigration.
  • "The unemployment rate’s at 4.4%. ... very close to what the Fed thinks it will be in the long run." – Eric Rosengren [01:35]

2. Fed’s Policy Options: Cautious Approach Recommended

• Advocates for ‘Wait and See’:
  • Rosengren suggests the Fed is "well situated to wait and see" rather than make rapid policy changes.
  • Fiscal policy is expected to be stimulative in the coming year due to large deficits and the recently passed "big beautiful bill," which contains investment credits and consumer tax relief.
  • "I think the conditions for reasonable growth next year are there." – Eric Rosengren [02:13]
• No Immediate Need for Rate Changes:
  • No urgent justification for changing interest rates as long as growth projections hold.

3. Political Pressure, Powell’s Departure & Fed Leadership Transition

• Political Influences Loom, But Data Remains Central:
  • The host raises concerns that political dynamics and White House jawboning might shift policy outcomes.
  • "It does matter who's in positions to make the decisions." – Eric Rosengren [03:17]
• Power Vacuum and Outlook:
  • Jay Powell’s term ends in May; the administration’s nominee is expected to favor lower rates, reflecting the President’s clearly stated preference.
  • Genuine rate cuts may not occur until a new chair is installed, and even then, convincing the FOMC remains crucial.
  • "It's still not a slam dunk, even with a new Fed chair that rates actually decline..." – Eric Rosengren [03:48]
• Concerns over Independence and Legal Challenges:
  • Ongoing DOJ subpoenas and Supreme Court scrutiny over the Federal Reserve's governance have heightened debates about the Fed’s autonomy.

4. Risks to Federal Reserve Independence

• Historical Context and Modern Threats:
  • Loss of central bank independence is typically associated with developing nations, but current U.S. events are raising red flags.
  • "Fed independence is critically important. ... The Federal Reserve was constructed to be pretty independent from the rest of government..." – Eric Rosengren [05:19]
• Potential Costs of Eroded Independence:
  • If independence is undermined, the next Fed chair may struggle to lower rates or convince markets of the bank's credibility.
  • There’s a risk that "the long end will go up as people become concerned that the policies will generate ongoing inflation higher than what we've historically had." – Eric Rosengren [06:13]

Notable Quotes & Memorable Moments

• "The inflation news has not been such that you can have a great deal of confidence that the Fed's going to get back to target. Particularly, as you note, they've missed their 2% target for almost five years."
  — Eric Rosengren [00:53]

• "Fiscal policy is going to be stimulative because we're running large deficits. The big beautiful bill included investment credits that encourage investment and also has lower taxes for helping consumers out."
  — Eric Rosengren [01:58]

• "Whoever gets picked [as chair] has to have enough credibility and has to have strong enough arguments that he convinces a majority of the FOMC to vote their way."
  — Eric Rosengren [03:40]

• "To the extent that various actions by the administration undermine the belief that the Fed will stay independent, it will make harder for the next chair to actually lower interest rates, convince people that they are truly independent..."
  — Eric Rosengren [05:47]

Timestamps for Key Segments

• Fed’s Policy Challenged by Inflation – [00:33] to [02:09]
• Labor Market Analysis – [01:00] to [01:40]
• Fiscal Policy’s Role & 2026 Outlook – [01:48] to [02:13]
• Political Pressures and FOMC Dynamics – [02:31] to [04:09]
• DOJ, Supreme Court, and Independence Debate – [04:35] to [05:47]
• Risks of Lost Independence for Monetary Policy – [05:19] to [06:32]

Conclusion

Eric Rosengren delivers a sober, data-driven perspective on Fed policy, highlighting that while modest growth and persistent inflation don’t yet justify rate cuts, looming political changes and legal scrutiny threaten the Fed’s historic independence. His measured optimism about fiscal stimulus and guarded caution about political interference provide crucial context for financial markets—and underscore the stakes for U.S. monetary policy in a pivotal year.