Former Boston Fed President: If the economy slows at its current rate, the Federal Reserve can stop raising interest rates

The former president of the Boston Federal Reserve said Wednesday,If the job market and economic growth continue to slow at their current slow pace, the Federal Reserve could end its rate hike cycle.

CME Group's FedWatch tool shows that financial marekts generally expect the Federal Reserve to keep interest rates unchanged at its September 19-20 policy meeting, but have mixed views on whether to pause or further hikes in November.

“As long as it looks like we are on track to gradually reach the Federal Reserve's 2% inflation target, there is no reason for further rate hikes from now on"Rosengren, who served as president of the Boston Fed from 2007 to 2021, told the Reuters Global Markets Forum.

Data released on Wednesday showed ADP job growth slowed markedly in August, while the price index for personal consumption expenditures (PCE) excluding food and energy was revised down to 3.7 percent in the second quarter. On Tuesday, the U.S. Labor Department reported that the number of job openings in July fell to levels last seen in early 2021.

Rosengren said,This suggests that the Fed's rate hikes are bringing inflation down to the Fed's 2% target, while the full impact of tightening has yet to materialize.

He expects car prices to fall and banks to continue to slow lending, which will continue to dampen economic growth and inflation through the end of the year.

However,A rate cut is unlikely to be on the agenda until core PCE falls to levels "closer to 3% rather than 4%"Rosengren added.

AlthoughIndustrial foreign exchangeThe economic data showed positive signs, but he said,It is too early to say that the Fed has succeeded in achieving a "soft landing."A soft landing is when inflation falls while unemployment remains relatively low, avoiding a recession.

"We need a little more time before we can say definitively that this is the case," he said.