During an Oct. 8 speech, Boston Federal Reserve President Eric Rosengren said that years of low interest rates led to excessive risk-taking in commercial real estate and will exacerbate the current economic downturn.
Rosengren also said that he expects a wave of defaults and bankruptcies to hit. These will aggravate an unemployment problem that has disproportionally impacted lower-wage workers.
Regulatory authorities should have been able to see conditions building up that would make any unexpected crisis worse, he added.
“Clearly a deadly pandemic was bound to badly impact the economy,” Rosengren said. “However, I am sorry to say that the slow build-up of risk in the low-interest-rate environment that preceded the current recession likely will make the economic recovery from th…