Commenting on the economy, Boston Fed President Eric Rosengren on Monday said that financial market expectations of only a very slow removal of monetary policy accommodation could, in his view, prove unduly pessimistic.

In reaction to volatility in both foreign and domestic markets earlier this year, federal funds rate futures fell significantly, reflecting expectations for only a very gradual increase in short-term interest rates. Futures markets assign a very high probability of one or zero increases in rates by the end of this year.

"My own sense is that financial markets may have reacted too strongly," Rosengren said.

With financial market volatility subsiding, Rosengren expressed some surprise that the expected path of monetary policy embedded in futures markets is so low.

"A weak forecast doesn't seem to explain the path expected for the funds rate," he said. "As I see it, the risks seem to be abating that problems from abroad would be severe enough to disrupt the U.S. recovery. Financial-market volatility has fallen, and most economic forecasts do not reflect expected large spillovers from continued headwinds from abroad."

Rosengren said it increasingly appears that the U.S. has weathered foreign shocks quite well.

"I personally expect that a stronger economy, at essentially full employment and with gradually rising inflation, will lead to more tightening than is currently priced into the futures market expectations for the next two years," Rosengren said.

Rosengren was quick to emphasize that his outlook still calls for a gradual pace of increases and that, as always, the path should depend on incoming economic data.

Turning to cybersecurity, Rosengren noted that the risks in the cyber realm are, unfortunately, not abating.

While banks must continue to evolve with and invest in financial services innovations, Rosengren said, they are staying attuned to and strategic about the cyber risks that come with online and mobile delivery.

In Rosengren's view, banking organizations need to continue to evolve as these risks morph, and as new innovations and expectations of convenience introduce new challenges to security.

In setting the context for the remainder of the day’s program on cybersecurity, Rosengren said "Cyber risks make it imperative that we all work together to ensure that resiliency, monitoring, detection, and recovery capabilities are operational in the financial system."

Rosengren was speaking at the Federal Reserve Bank of Boston's 2016 Cybersecurity Conference