Boston Fed’s Eric Rosengren and Ken Montgomery look back and look ahead
Bank’s president, first vice president answer seven questions about 2017 and New Year ahead
(Editor’s note: answers have been edited for brevity.)
1. Name a Boston Fed accomplishment in 2017 of which you are particularly proud. (It’s OK--you can have more than one.)
Eric Rosengren: On the monetary policy side, we hosted a timely economic conference that highlighted that we shouldn’t have a formula to determine monetary policy. It focused on how the Bank thinks about monetary policy and how economic relationships have changed since the financial crisis. We’ve also done a good job focusing on low- and moderate-income communities through efforts like the Working Cities Challenge, which is now in three states.
Ken Montgomery: Our Bank did a lot this year to contribute to the mission of the Federal Reserve System, but an area that stands out for me is our work to support the U.S. Treasury—especially Navy Cash. I’ve been very impressed with the deep commitment our staff continues to show in terms of the operation because it impacts so many in the U.S. military.
2. How about a 2017 accomplishment in your personal life of which you are particularly proud?
Eric Rosengren: My son moved back to Boston and is working in the city. Also, my daughter is engaged to be married and is finishing medical school. It will be nice to have a doctor in the family who can actually do something other than read academic articles!
Ken Montgomery: I’m really proud of the work that I’m doing with the Boston Private Industry Council, which has been an eye-opening, personally rewarding experience. It’s given me an opportunity to get involved with the Boston Public Schools and I learn a lot from interactions with that group that supports the work our Bank does relative to the inequality of opportunity.
3. Your favorite non-work travel destination of 2017?
Eric Rosengren: That’s an easy one—it was combined work and leisure. I gave a talk at the Financial Stability Institute in Bali, Indonesia. I had been there in 1979, but it’s a very different place today. It has a very robust tourist economy, some hallmarks of which are beautiful Hindu temples that date back 1,000 years and lush jungles.
Ken Montgomery: Richmond, Virginia—no question. My two sons live there and between them they have three kids: a 4 year-old, 3 year-old, and an 18 month-old. We’re down there a lot and our grandkids kept us pretty busy this year. I know more about Thomas the Tank Engine and Olivia the Pig than I ever thought I would.
4. Favorite book you read in 2017?
Eric Rosengren: I’m a big fan of history, so I’d have to say Alexander Hamilton by Ron Chernow. It’s a pretty thick volume, but it does a great job of characterizing Hamilton’s upbringing and activity during the Revolutionary War, in particular.
Ken Montgomery: Churchill: The Power of Words. It’s a collection of his speeches and writings, from childhood up until his death. I’m also big fan of Lee Child—I’ve read just about every Jack Reacher book. I find that the more I travel for business, the more I am able to take the time to read for pleasure. The beauty of being on a plane a lot is that you’re captive and your choices are limited: either stay connected and respond to emails, or shut the darn thing off and read a book.
5. What are some of the challenges you expect for the Federal Reserve in 2018?
Eric Rosengren: The Federal Reserve System is in transition—we will have a new chair and a number of new Governors. Essentially, over the course of the next couple of years, we’ll have very different leadership at the Board of Governors, which will make 2018 an interesting transition year.
In terms of the Boston Fed, there’s an opportunity to think more broadly about the problems that we want to solve. We’re going to have an opportunity over the coming year to think about some of the potential side effects of having low interest rates for a long period of time. How destabilizing is such an environment? Do we see asset bubbles? What is the investment environment being created with monetary policy, and with U.S. fiscal policy? These are the kinds of themes we will be thinking about in the coming year.
Ken Montgomery: For one, our new responsibilities around improving the security of the U.S. payments system have national implications and will undoubtedly be challenging work. In addition, from monetary policy to community outreach, we are involved in work that has impacts at every level of the economy. Communicating about how we’re making a difference has been and continues to be a challenge, but one I think we are getting better at with each year.
6. For many, this feels like a moment of global uncertainty. What in particular keeps you up at night?
Eric Rosengren: There are geopolitical risks that are now more severe than they were a couple years ago. On the financial stability front, it’s not just the United States that has had low interest rates—it’s a global phenomenon. I do worry that we may start to see “reach for yield” kinds of behaviors on financial investments that could potentially have broader implications at a time when monetary or fiscal policy can’t react if we get a big negative shock.
Ken Montgomery: Yes, this is a time of uncertainty on many levels, domestically and globally. I’m looking at 2018 optimistically, though. People and businesses seem to be upbeat about the economy. And there’s a lot of innovation happening in the FinTech space, but there’s also a lot of ‘hype.’ Figuring out what is ‘hype’ versus what is going to be a reality, I hope is something that will become clearer in 2018.
7. Willing to share any of your own New Year’s resolutions?
Eric Rosengren: Weight loss is among them—you can write that down. If you see me with a big bun covered in sugar, please tell me to put it down. It’s important to be healthy, and with a lot of travel, it can be difficult. Plus, I enjoy food.
Ken Montgomery: Better time management in my personal life is a big area for improvement for me. I’ve given up the “go to the gym” and “cut out wheat.”