Eric Rosengren said on Monday he would step down as president of the Boston branch of the Federal Reserve this week due to health issues, just weeks after his trading activity prompted the central bank to launch an ethics review.
Rosengren, who joined the Boston Fed more than three decades ago and has led the regional bank since 2007, said he would cut short his tenure nine months early and depart on September 30.
The announcement follows a tumultuous period for the Boston Fed president, after reports earlier this month that he and Dallas Fed president Robert Kaplan had been active investors while the US central bank was aggressively shoring up financial markets to stem the damage from the pandemic last year.
He was initially set to retire in June 2022, when he would have reached the mandatory retirement age for the position. Rosengren on Monday cited a worsening kidney condition, having qualified for the transplant list in June last year, according to a statement.
“It has been an honour to serve at the Federal Reserve System, in a job where one can be constantly engaged in pursuing the economic and financial wellbeing of the country and New England,” he said on Monday. “I know that my colleagues will build on our progress, and continue making a difference for the public we serve.”
Kaplan disclosed that he held stakes worth more than $1m in 27 publicly traded companies, funds and alternative investments, while Rosengren listed stakes worth at least $151,000 in four real estate investment trusts.
Both Fed presidents agreed to sell their portfolio of shares by the end of September and hold the proceeds in cash or passive funds — a move Rosengren attributed at the time to “[avoiding] even the appearance of a conflict of interest”.
Fed chair Jay Powell has since ordered a sweeping review of the Fed’s ethics guidelines and said that the central bank would seek to strengthen rules regarding the trading activities of senior officials.
In a statement on Monday, Powell said of Rosengren’s tenure: “Eric has distinguished himself time and again during more than three decades of dedicated public service in the Federal Reserve System . . . In addition to his monetary policy insights, Eric brought a relentless focus on how best to ensure the stability of the financial system. My colleagues and I will miss him.”
Rosengren’s position will be filled on an interim basis by Kenneth Montgomery, first vice-president and chief operating officer of the branch. Preparations to find the next president are “well under way”, according to the bank.
The next Boston Fed president will be a voting member on the policy-setting Federal Open Market Committee in 2022. Fed officials are evenly divided on the prospects of an interest rate increase as early as next year, according to new individual projections published by the central bank last week, with at least three rate rises pencilled in by the end of 2023.
Before it tightens monetary policy, the Fed is tasked with winding down its $120bn-per-month asset purchase programme, which has been in place since last year and was set to continue until the central bank saw “substantial further progress” on achieving average 2 per cent inflation and maximum employment.
The Fed is now widely expected to announce at its next policy meeting in November that it will begin reducing the pace of those bond purchases.