Inflation goal may be too low, says Fed's Rosengren: FT

Rosengren said he wanted the Federal Open Market Committee to debate about whether the United States' inflation target of 2 per cent was too low, the FT reported.

If inflation targets were set higher, it could mean a higher long-run policy rate, which would mean more room to cut interest rates before hitting the so-called "zero lower bound", Rosengren, who does not have a vote on the Fed's policy-setting committee this year, told FT.

The U.S. labor market needs to strengthen further and inflation needs to show signs of heading back up to 2 percent before the Federal Reserve will raise interest rates, Rosengren said in a speech in London last week.

The Fed set a 2 percent inflation target in 2012, under a dual mandate to seek maximum employment and price stability, a goal it has not hit since that year while its target rate has been at near-zero levels since 2008, the FT said.

Rosengren also said he expects first-quarter U.S. growth to be slower than the 2.2 percent recorded for the end of last year, the newspaper reported.

In a sign of an uptick in inflation, U.S. consumer prices increased for a second straight month in March on rising gasoline and housing costs.

Rosengren could not be reached for comments outside regular U.S. business hours.

(Reporting by Ismail Shakil in Bengaluru; Editing by Anupama Dwivedi)