Fed's Rosengren: Deflation more concern than inflation

WORCESTER, Massachusetts Thu May 21, 2009 8:49pm EDT

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WORCESTER, Massachusetts (Reuters) - The risk of deflation is currently more of a concern than inflation, Boston Federal Reserve Bank President Eric Rosengren said on Thursday.

"Between inflation and deflation, my concerns are currently more weighted toward deflation," Rosengren said in response to audience questions after giving a speech to the Worcester Economic Club.

He added that the size of the Fed's balance sheet -- which has more than doubled in the financial crisis -- was "not a situation we want to be in, it's a situation we need to be in" given the severity of the crisis.

Answering a separate question, Rosengren said that due to the global nature of the crisis "in the short-run it will be hard to have export-led growth."

Rosengren is not a voter in 2009 on the Federal Open Market Committee, the Fed's policy-setting panel.

(Reporting by Kristina Cooke; Editing by Leslie Adler)

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