THE recent volatility in financial markets reinforces the need for the U.S. Federal Reserve to be patient with its policy stimulus and to clearly tie an eventual interest-rate rise to improving economic conditions, a top Fed policymaker told Reuters.

    Boston Fed President Eric Rosengren said that while it would take a few more weeks to understand the real economic fallout from the market selloff, he could “easily imagine” a scenario in which the U.S. central bank keeps rates near zero until 2016.

    The sharp week-long drop in global stocks and bond yields abated Friday, though investors remained on edge over increasing signs of a stumbling European economy and weakness in China and Japan. Amid the financial turmoil, futures traders placed bets on a later Fed rate hike toward the end of 2015.

    “Patient monetary policy probably makes sense,” Rosengren, a dovish Fed official, said in an interview over the weekend. “Certainly the events of the last couple of weeks probably give some credence to thinking about being patient as well as trying to process some of the movements we’re seeing.”

    The key, he said, will be identifying any weakness in broader U.S. inflation and workers’ wages, and not simply reacting to turbulence in markets like inflation-protected Treasuries.(SD-Agencies)