By Michael S. Derby 

Federal Reserve Bank of Boston President Eric Rosengren said Wednesday he wants the U.S. central bank to raise rates more aggressively than the consensus outlook of his colleagues, provided the economy performs as he expects it to.

"I view four increases this year as fully consistent with comments from [Federal Open Market Committee] participants stating that the path of normalizing rates will be gradual," Mr. Rosengren said in a speech to the Boston Economic Club. That compares with the three rate increases recently penciled in by Fed officials.

The Fed's rate-setting FOMC earlier this month raised its short-term interest rate target to a range of 0.75% to 1% and signaled around two more rate rises are likely for the remainder of 2017, indicating three increases for the year.

"Looking ahead over the course of this year, I believe it is likely to be appropriate for the FOMC to raise rates at a more regular -- though still gradual -- pace," Mr. Rosengren said.

"My own view is that an increase at every other FOMC meeting over the course of this year could and should be the committee's default, unless economic data come in inconsistent with forecasts," the central banker said. "This would still be a fully data-dependent approach, not a preset path, as it would hinge on the incoming data -- but the base case would be four tightenings, reflecting the strength of the economy that I believe justifies more regular normalization of interest rates."

Mr. Rosengren, once a skeptic of the need to raise rates when inflation is low, has for some time been a supporter of boosting borrowing costs. He has expressed concerns about heated conditions in the commercial real-estate sector and has argued that raising rates now will help keep the economy in balance and allow the expansion to go on for longer.

Some of Mr. Rosengren's colleagues haven't expressed the same appetite for boosting borrowing costs. Even as the economy continues to perform well, uncertainty hangs over the outlook, in part fueled by unknowns about government taxation, spending and regulations.

In a CNBC interview Tuesday, the influential vice chairman of the Fed, Stanley Fischer, said the central bank's forecast for two more rate increases this year "seems to be about right, that is to say, it's my forecast as well."

"I think the risks are more or less balanced," meaning it is equally possible officials could deliver more or less than the current outlook, Mr. Fischer said.

In his speech, Mr. Rosengren was upbeat about the economy and mindful that overheating could be a risk if it is left on the current path.

"Conditions do not require the FOMC to rush policy actions," Mr. Rosengren said. Still, "it seems likely that the economy will have achieved both elements of the Federal Reserve's dual mandate by the end of this year -- full employment and stable prices."

That said, "it is important to avoid creating an over-hot economy that could require a more rapid tightening of monetary policy -- which would place at risk the economic improvements seen to date."

Fielding questions from the audience, Mr. Rosengren said a combination of the Fed's tightening efforts plus the gradually rising inflation that private forecasters anticipate should influence long-term interest rates.

"I'll be very surprised if long rates don't start responding" to those factors, he said. "My expectation is over time we'll actually see that the 10-year rate will be higher than it is right now."

The regional Fed president also said he isn't worried about a slowdown in bank lending, which is expected when the Fed raises rates. For example, "we do expect things like mortgage applications to slow down," Mr. Rosengren said. "It's not a slowdown that's rapid enough where I'm all that concerned," he said of bank lending.

Mr. Rosengren also discussed coming changes in top Fed positions, including what soon will be three open spots on the seven-seat board of governors for President Donald Trump to fill.

"I expect that Federal Reserve policy will remain relatively consistent, but we'll see depending on who actually gets appointed," Mr. Rosengren said.

Jon Kamp contributed this article.

Write to Michael S. Derby at michael.derby@wsj.com

(END) Dow Jones Newswires

March 29, 2017 13:40 ET (17:40 GMT)

Copyright (c) 2017 Dow Jones & Company, Inc.